New Republic Bank Limited v MEC for Sports, North-West Province (72/2004) [2006] ZANWHC 18 (2 March 2006)

CASE NO. 72/2004

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

In the matter between:

NEW REPUBLIC BANK LIMITED (In Receivership) PLANTIFF

and

MEC FOR SPORT, NORTH WEST PROVINCE DEFENDANT

______________________________________________________________________

JUDGMENT

MOGOENG JP.

Introduction

[1] The central question in this action is whether or not the 13 master rental agreements, relating to office equipment,1 concluded between Technofin Leasing and Finance (Pty) Limited (“Technofin”), the lessor, and the Department of Education,

Sport and Recreation of the North West Province (“the Department”) as lessee, are invalid because the Department entered into those master rental agreements without the tender board, established by the North West Tender Board Act2 (“the Act”), having arranged the hiring or letting of the equipment in terms of s 4(1) of the Act. [2] After the conclusion of the aforementioned master rental agreements Technofin ceded, to the Plaintiff, all its rights in and to all of them. The validity of this cession was questioned and other unrelated issues3 were raised. The need to deal with all these issues would only arise depending on the answer to the central issue. Because of the view I take of the matter, it will not be necessary to address all the issues alluded to above. Only the central issue and estoppel call for special attention. Background [3] What happened is that an acting Chief Director, who was responsible for Sport within the Department, solicited quotations for office equipment from a particular supplier who was some kind of an agent for Technofin. That invitation was not extended to other suppliers and no sound reason was advanced as to why other suppliers were overlooked. Consequent upon the receipt of quotations, the 13 master rental agreements mentioned above were concluded for 5 years by the acting Chief Director and Technofin. All of this was done at the time when the North West tender board (“the tender board”) was already in existence. Notwithstanding this, there was no reference to the tender board at all. It is also common cause that the Deputy Director General for the Department was neither informed about, nor involved in the conclusion of these agreements. For the purpose of this judgment, it will, however, be assumed without deciding the issue, that the acting Chief Director was authorised by the Department to conclude the aforementioned agreements. [4] The Department took delivery of the equipment and paid the rental due to Technofin. Even after Technofin had ceded its rights to the Plaintiff, the Department continued to pay the rental. It was only a few years later that the Department stopped payment. Does the tender board have the exclusive power to bind Government contractually? [5] The non-payment moved the Plaintiff to institute the present action for payment of all the outstanding rental as well as for the return of the equipment which was the merx or subject-matter of the master rental agreements. In his plea, the Defendant says that the master rental agreements are all invalid for want of compliance with the provisions of s 4(1) of the Act which provides that: “4. Powers of the board.—(1) The board shall have power to procure supplies and services for the Government and, subject to the provisions of any other Act of the Legislature of the North West, to arrange the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the Government and to dispose of movable Government property, and may for that purpose— on behalf of the Government, conclude an agreement with a person within or outside the Province for the furnishing or supplies and services to the Government or for the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the Government or for the disposal of movable Government property;

with a view to concluding an agreement referred to in paragraph (a), in any manner it may deem fit, invite offers and determine the manner and the conditions subject to which such offers shall be made;

inspect and test or cause to be inspected and tested supplies and services which are offered or which are or have been furnished in terms of an agreement concluded under this section, and anything offered for hire;

subject to the provisions of section 6, accept or reject any offer for the conclusion of an agreement referred to in paragraph (a);

on behalf of the Government, resile from any agreement concluded under this section and, in appropriate cases, claim damages;

subject to the provisions of subsection (2), on such condition it may determine, exempt any person with whom such an agreement has been concluded from compliance therewith or condone the failure of such person to comply with such agreement;

subject to the provisions of subsection (2), negotiate a settlement with a person referred to in paragraph (f), or amend the agreement concerned with the approval of such person;

issue directives to departments in regard to the procurement of supplies and services, the hiring or letting of anything, the acquisition or granting of any right, or the disposal of movable property belonging to the Province in order to achieve the objects of the Act.” (My emphasis) [6] Counsel for the Defendant, Mr Dikolomela, submitted that since the coming into operation of the Act no procurement of supplies and services, no hiring or letting of anything, and no acquisition or granting of any right, may be done for and on behalf of the Provincial Government through any channel other than the tender board or at least with the approval of the tender board. He submitted further that since all the master rental agreements were admittedly concluded by the Department, without any reference to the tender board, all those agreements are invalid. He relied on the provisions of s 4(1) of the Act and on the case of Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd4 (“Contractprops”) in support of his submission. [7] Mr Marais drew a distinction between the language used to confer power on the North West tender board and the words employed for the same purpose in relation to the Eastern Cape tender board by s 4(1) of the Provincial Tender Board Act (Eastern Cape)5 on which the Supreme Court of Appeal decision in Contractprops was based. That section provides that: “Within the framework of the principles set out, in the guidelines, the board shall have the sole power to procure supplies and services for the province, and, subject to the provisions of any other Act of the provincial legislature, to arrange the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the province, and to dispose of movable property, . . .” (My emphasis)

[1] The central question in this action is whether or not the 13 master rental agreements, relating to office equipment,1 concluded between Technofin Leasing and Finance (Pty) Limited (“Technofin”), the lessor, and the Department of Education,

Sport and Recreation of the North West Province (“the Department”) as lessee, are invalid because the Department entered into those master rental agreements without the tender board, established by the North West Tender Board Act2 (“the Act”), having arranged the hiring or letting of the equipment in terms of s 4(1) of the Act.

[2] After the conclusion of the aforementioned master rental agreements Technofin ceded, to the Plaintiff, all its rights in and to all of them. The validity of this cession was questioned and other unrelated issues3 were raised. The need to deal with all these issues would only arise depending on the answer to the central issue. Because of the view I take of the matter, it will not be necessary to address all the issues alluded to above. Only the central issue and estoppel call for special attention.

Background

[3] What happened is that an acting Chief Director, who was responsible for Sport within the Department, solicited quotations for office equipment from a particular supplier who was some kind of an agent for Technofin. That invitation was not extended to other suppliers and no sound reason was advanced as to why other suppliers were overlooked. Consequent upon the receipt of quotations, the 13 master rental agreements mentioned above were concluded for 5 years by the acting Chief Director and Technofin. All of this was done at the time when the North West tender board (“the tender board”) was already in existence. Notwithstanding this, there was no reference to the tender board at all. It is also common cause that the Deputy Director General for the Department was neither informed about, nor involved in the conclusion of these agreements. For the purpose of this judgment, it will, however, be assumed without deciding the issue, that the acting Chief Director was authorised by the Department to conclude the aforementioned agreements.

[4] The Department took delivery of the equipment and paid the rental due to Technofin. Even after Technofin had ceded its rights to the Plaintiff, the Department continued to pay the rental. It was only a few years later that the Department stopped payment.

Does the tender board have the exclusive power to bind Government contractually?

[5] The non-payment moved the Plaintiff to institute the present action for payment of all the outstanding rental as well as for the return of the equipment which was the merx or subject-matter of the master rental agreements. In his plea, the Defendant says that the master rental agreements are all invalid for want of compliance with the provisions of s 4(1) of the Act which provides that:

“4. Powers of the board.—(1) The board shall have power to procure supplies and services for the Government and, subject to the provisions of any other Act of the Legislature of the North West, to arrange the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the Government and to dispose of movable Government property, and may for that purpose—

on behalf of the Government, conclude an agreement with a person within or outside the Province for the furnishing or supplies and services to the Government or for the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the Government or for the disposal of movable Government property;

with a view to concluding an agreement referred to in paragraph (a), in any manner it may deem fit, invite offers and determine the manner and the conditions subject to which such offers shall be made;

inspect and test or cause to be inspected and tested supplies and services which are offered or which are or have been furnished in terms of an agreement concluded under this section, and anything offered for hire;

subject to the provisions of section 6, accept or reject any offer for the conclusion of an agreement referred to in paragraph (a);

on behalf of the Government, resile from any agreement concluded under this section and, in appropriate cases, claim damages;

subject to the provisions of subsection (2), on such condition it may determine, exempt any person with whom such an agreement has been concluded from compliance therewith or condone the failure of such person to comply with such agreement;

subject to the provisions of subsection (2), negotiate a settlement with a person referred to in paragraph (f), or amend the agreement concerned with the approval of such person;

issue directives to departments in regard to the procurement of supplies and services, the hiring or letting of anything, the acquisition or granting of any right, or the disposal of movable property belonging to the Province in order to achieve the objects of the Act.”

(My emphasis)

[6] Counsel for the Defendant, Mr Dikolomela, submitted that since the coming into operation of the Act no procurement of supplies and services, no hiring or letting of anything, and no acquisition or granting of any right, may be done for and on behalf of the Provincial Government through any channel other than the tender board or at least with the approval of the tender board. He submitted further that since all the master rental agreements were admittedly concluded by the Department, without any reference to the tender board, all those agreements are invalid. He relied on the provisions of s 4(1) of the Act and on the case of Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd4 (“Contractprops”) in support of his submission.

[7] Mr Marais drew a distinction between the language used to confer power on the North West tender board and the words employed for the same purpose in relation to the Eastern Cape tender board by s 4(1) of the Provincial Tender Board Act (Eastern Cape)5 on which the Supreme Court of Appeal decision in Contractprops was based. That section provides that:

“Within the framework of the principles set out, in the guidelines, the board shall have the sole power to procure supplies and services for the province, and, subject to the provisions of any other Act of the provincial legislature, to arrange the hiring or letting of anything or the acquisition or granting of any right for or on behalf of the province, and to dispose of movable property, . . .”

According to Mr Marais this case is distinguishable from the Contractprops decision on the basis that the North West Act simply vests power in the tender board whereas the Eastern Cape Act vested sole or exclusive power in the tender board of that Province. That, according to Mr Marais, is the fundamental difference on the strength of which this Court must find that the Contractprops case, on which Mr Dikolomela relies, does not apply to this matter. The effect of not conferring sole or exclusive power on the tender board, so the argument runs, was to leave the Department’s power to rent or lease equipment intact. Asked where the Department got that power from, Mr Marais submitted that the Department has some inherent or implied power to buy stationary for itself and it follows that it should also have the power to arrange the hiring or letting of equipment within ‘reasonable bounds’. [8] I am of the view that but for the word sole in the Eastern Cape Act, the two Acts are fundamentally the same and confer exclusive powers upon their respective tender boards. The difference arising from the use of “sole power” in the one Act and an unqualified “power” in the other Act is cosmetic.6 Notwithstanding the absence of the word sole from the North West Tender Board Act, the following remarks by Marais JA7 apply within equal force to the North West Act as they did to the then8 Eastern Cape legislation: “(5) Here, of course, we are dealing not with the form in which a statute requires a transaction to be clothed but with something more fundamental: the express conferment of sole power upon a specified entity, to the exclusion of any other person or entity, to arrange leases. (I say ‘to the exclusion of any other person or entity’ because that is undeniably the plain and ordinary meaning of the words ‘shall have the sole power — to arrange the hiring of anything — for or on behalf of the province’.)” (My emphasis)

According to Mr Marais this case is distinguishable from the Contractprops decision on the basis that the North West Act simply vests power in the tender board whereas the Eastern Cape Act vested sole or exclusive power in the tender board of that Province. That, according to Mr Marais, is the fundamental difference on the strength of which this Court must find that the Contractprops case, on which Mr Dikolomela relies, does not apply to this matter. The effect of not conferring sole or exclusive power on the tender board, so the argument runs, was to leave the Department’s power to rent or lease equipment intact. Asked where the Department got that power from, Mr Marais submitted that the Department has some inherent or implied power to buy stationary for itself and it follows that it should also have the power to arrange the hiring or letting of equipment within ‘reasonable bounds’.

[8] I am of the view that but for the word sole in the Eastern Cape Act, the two Acts are fundamentally the same and confer exclusive powers upon their respective tender boards. The difference arising from the use of “sole power” in the one Act and an unqualified “power” in the other Act is cosmetic.6 Notwithstanding the absence of the word sole from the North West Tender Board Act, the following remarks by Marais JA7 apply within equal force to the North West Act as they did to the then8 Eastern Cape legislation:

“(5) Here, of course, we are dealing not with the form in which a statute requires a transaction to be clothed but with something more fundamental: the express conferment of sole power upon a specified entity, to the exclusion of any other person or entity, to arrange leases. (I say ‘to the exclusion of any other person or entity’ because that is undeniably the plain and ordinary meaning of the words ‘shall have the sole power — to arrange the hiring of anything — for or on behalf of the province’.)”

We are not dealing here with the form in which the Act requires the master rental agreements to be clothed, but with something more fundamental. The Act is about the establishment of a tender board expressly vested with the power to, among other things, arrange the hiring or letting of anything on behalf of the Provincial Government. [9] There was good reason for the establishment of the tender board. The tender board was created to be the sole reservoir of the powers set out in s 4(1) of the Act. This would explain why the tender board also has the power in s 4(1)(h)9 to: “(h) issue directives to departments in regard to the procurement of supplies and services, the hiring or letting of anything, the acquisition or granting of any right, or the disposal of movable property belonging to the Province in order to achieve the objects of the Act.” (My emphasis)

We are not dealing here with the form in which the Act requires the master rental agreements to be clothed, but with something more fundamental. The Act is about the establishment of a tender board expressly vested with the power to, among other things, arrange the hiring or letting of anything on behalf of the Provincial Government.

[9] There was good reason for the establishment of the tender board. The tender board was created to be the sole reservoir of the powers set out in s 4(1) of the Act. This would explain why the tender board also has the power in s 4(1)(h)9 to:

“(h) issue directives to departments in regard to the procurement of supplies and services, the hiring or letting of anything, the acquisition or granting of any right, or the disposal of movable property belonging to the Province in order to achieve the objects of the Act.”

The tender board has been specifically empowered to issue directives to provincial departments ‘in order to achieve the objects of the Act’ because any power which these Departments may have for the procurement of supplies and services, hiring or letting of anything or acquisition or granting of any right would derive from the tender board. It is for this reason that the tender board was given the power to guide the Departments in the exercise of its own power which it would have delegated to those Departments, in order to achieve the objects of the Act. Any suggestion that the power to do what the Department did in this case, existed independent of the Act, would mean that there was no mischief sought to be prevented by the passing of the Act, and that cannot be correct. [10] It follows, therefore, that the Department had no power in law to conclude the agreements and if it ever had that power, it had been deprived of it by the Act.10 The tender board’s powers to procure supplies and services and to arrange the letting or hiring of anything for the Government are only subject ‘to the provisions of any other Act of the Legislature of the North West’.11 Neither the Plaintiff nor their witness, the former acting Chief Director, were able to cite any other source or an Act of the Legislature which conferred power on the Department, to conclude the 13 master rental agreements. It is evident from the reading of the Act as a whole that it was designed to interpose the tender board between the province and those with whom it might wish to contract for the hiring or letting of anything.12 Although the word sole or exclusive was not inserted just before the word power in s 4(1) of the Act, the powers conferred upon the board are sufficiently wide to show that it is the board alone which has the authority and the power to arrange the letting or hiring of services, on behalf of the province.13 [11] The finding of the Supreme Court of Appeal in the case of the Eastern Cape Department of Education, that it was difficult to see any room for the co-existence of a power residing in other entities or persons within the provincial administration to do, without any reference whatsoever to the tender board, that which s 4(1) empowers the tender board to do, applies to this matter. Section 4 (1) disables the provincial Departments from acting autonomously in that connection.14 I am satisfied that the provincial Departments in the North West Province may only exercise the powers assigned to the tender board if such powers were delegated to them by the tender board in terms of s 5 of the Act. Accordingly, it is found that since the tender board had not delegated its powers to arrange the letting or hiring of anything to the Department at the relevant time, the Department lacked the authority to conclude the 13 master rental agreements. Prejudice versus invalidity [12] The Unfairness, the patronage and the corruption which is the mischief sought to be prevented or curtailed through the tender board system would be inadvertently perpetuated if these 13 master rental agreements, which were concluded without any reference to the tender board, were not to be visited with the resultant sanction of invalidity.15 [13] Mr Marais submitted on the one hand that since the Department was supplied with the equipment without which it would not have functioned efficiently, and since the Department did use the equipment for the duration of the agreements, there would be no prejudice to the Department if it were ordered to pay the balance of the agreed rental for the period over which it enjoyed the use of the equipment. On the other hand, so goes the submission, the Plaintiff would be highly prejudiced by the Court’s dismissal of the action for the payment of the outstanding agreed rental. This issue was properly addressed in the following terms:16 “In short, the consequences of visiting invalidity upon non-compliance are not so uniformly and one-sidedly harsh that the legislature cannot be supposed to have intended invalidity to be the consequence. What is certain is that the consequence cannot vary from case to case. Such transactions are either all invalid or all valid. Their validity cannot depend upon whether or not harshness is discernible in the particular case.”

The tender board has been specifically empowered to issue directives to provincial departments ‘in order to achieve the objects of the Act’ because any power which these Departments may have for the procurement of supplies and services, hiring or letting of anything or acquisition or granting of any right would derive from the tender board. It is for this reason that the tender board was given the power to guide the Departments in the exercise of its own power which it would have delegated to those Departments, in order to achieve the objects of the Act. Any suggestion that the power to do what the Department did in this case, existed independent of the Act, would mean that there was no mischief sought to be prevented by the passing of the Act, and that cannot be correct.

[10] It follows, therefore, that the Department had no power in law to conclude the agreements and if it ever had that power, it had been deprived of it by the Act.10 The tender board’s powers to procure supplies and services and to arrange the letting or hiring of anything for the Government are only subject ‘to the provisions of any other Act of the Legislature of the North West’.11 Neither the Plaintiff nor their witness, the former acting Chief Director, were able to cite any other source or an Act of the Legislature which conferred power on the Department, to conclude the 13 master rental agreements. It is evident from the reading of the Act as a whole that it was designed to interpose the tender board between the province and those with whom it might wish to contract for the hiring or letting of anything.12 Although the word sole or exclusive was not inserted just before the word power in s 4(1) of the Act, the powers conferred upon the board are sufficiently wide to show that it is the board alone which has the authority and the power to arrange the letting or hiring of services, on behalf of the province.13

[11] The finding of the Supreme Court of Appeal in the case of the Eastern Cape Department of Education, that it was difficult to see any room for the co-existence of a power residing in other entities or persons within the provincial administration to do, without any reference whatsoever to the tender board, that which s 4(1) empowers the tender board to do, applies to this matter. Section 4 (1) disables the provincial Departments from acting autonomously in that connection.14 I am satisfied that the provincial Departments in the North West Province may only exercise the powers assigned to the tender board if such powers were delegated to them by the tender board in terms of s 5 of the Act. Accordingly, it is found that since the tender board had not delegated its powers to arrange the letting or hiring of anything to the Department at the relevant time, the Department lacked the authority to conclude the 13 master rental agreements.

Prejudice versus invalidity

[12] The Unfairness, the patronage and the corruption which is the mischief sought to be prevented or curtailed through the tender board system would be inadvertently perpetuated if these 13 master rental agreements, which were concluded without any reference to the tender board, were not to be visited with the resultant sanction of invalidity.15

[13] Mr Marais submitted on the one hand that since the Department was supplied with the equipment without which it would not have functioned efficiently, and since the Department did use the equipment for the duration of the agreements, there would be no prejudice to the Department if it were ordered to pay the balance of the agreed rental for the period over which it enjoyed the use of the equipment. On the other hand, so goes the submission, the Plaintiff would be highly prejudiced by the Court’s dismissal of the action for the payment of the outstanding agreed rental. This issue was properly addressed in the following terms:16

“In short, the consequences of visiting invalidity upon non-compliance are not so uniformly and one-sidedly harsh that the legislature cannot be supposed to have intended invalidity to be the consequence. What is certain is that the consequence cannot vary from case to case. Such transactions are either all invalid or all valid. Their validity cannot depend upon whether or not harshness is discernible in the particular case.”

Similarly, all the 13 master rental agreements are invalid irrespective of how harsh such a finding of invalidity might be to the Plaintiff. For these reasons, the question in paragraph 1 above, has to be answered affirmatively, that is, in the Defendant’s favour. Estoppel and ostensible authority [14] The alternative contention advanced by the Plaintiff in support of its claims is that the circumstances surrounding the conclusion of those agreements demonstrate, quite clearly, that the Department’s officials represented to Technofin’s officials that the Department was duly authorised to conclude the master rental agreements in question. Mr Marais further submitted that such representation induced the lessor (to its prejudice) to deliver numerous machines in the belief that it could rely upon its rights as contained in the master rental agreements. For these reasons, so goes the submission, the Department must be estopped from raising the defence that its officials and the Department itself lacked the authority to conclude the agreements. [15] The reason for the Supreme Court of Appeal’s rejection of the same contention in the Contractprops case is also apposite in this case. A state of affairs prohibited by law in the public interest cannot be perpetuated by reliance upon the doctrine of estoppel. This Court may not legitimise the usurpation, by the Department, of the power of the tender board conferred upon it in the interests of the public. The fact that Technofin and by extension the Plaintiff was misled into believing that the Department had the power to conclude the agreements is regrettable. The resultant prejudice does not, however, detract from the fact that the master rental agreements were concluded ultra vires the powers of the Department and that those agreements cannot be allowed to stand as if the Department acted within its powers.17 [16] A related submission made in support of the validity of the agreements is that of ostensible authority. NBS Bank Ltd v Cape Produce Co. (Pty) Ltd & Others18 and Glofinco v ABSA Bank Ltd t/a United Bank19 were relied on essentially to make the point that the Department held itself out as an entity which was clothed with the requisite authority to enter into binding agreements on its own behalf with outsiders, and that the internal limitations or arrangements of the Department or Government should not be enforced to the prejudice of outsiders. This submission clearly misses the point which is, that the provisions of the North West Tender Board Act are not an internal limitation or arrangement within the Department of Education, Sport and Recreation or the Provincial Government to which only its members are privy. It is the law that is accessible to any member of the public and which the public and the corporate world are encouraged and expected to know. The submission that the authority or lack thereof by the officials of the Department is an internal limitation must, therefore, fail. Besides, ostensible authority and estoppel are so closely related that the one cannot really be an alternative to the other. The ostensible authority contention must fail for the same reasons the estoppel alternative failed. [17] Consequently, all the claims for the payment of arrear rental stand to be dismissed for the Department’s want of authority or power to conclude the 13 master rental agreements. The return of the merx [18] The issue that stands on a different footing is the return of the equipment to which the 13 master rental agreements relate. It is undisputed that the Provincial Department of Social Services returned the Canon NP 6050 photocopier with serial number CDB 09815 to the Plaintiff on 22 November 2005. This is one of the subject-matters of the 13 master rental agreements which the Department claimed were not delivered and that it did not, therefore, know their whereabouts. It has also come to light that Government has in its possession and has undertaken to return to the Plaintiff, a multi-colour function station model CLS 700 with serial number UKR 03912, although logistical problems frustrated attempts to return it to the Plaintiff. All the machines which are the subject-matter of these agreements were evidently delivered to the Defendant at one stage or the other. These machines belong to the Plaintiff and must accordingly be returned to it. It is immaterial which entity or Government Department the Department of Education, Sport and Recreation chose to give all or some of the equipment to after taking delivery of them. It remains the Defendant’s responsibility to locate all the outstanding equipment and give them back to the plaintiff. Accordingly, the Defendant is obliged to return the rest of the equipment to the plaintiff. Costs [19] The Defendant’s officials have been very difficult and indeed very uncooperative in all the attempts made by the Plaintiff to locate the machines which had no doubt been delivered by Technofin to the Defendant. When asked by the Plaintiff about the whereabouts of the equipment, the Department made no effort to locate the machines but was merely content with washing its hands of the transactions. It took very little effort by the Plaintiff’s legal representatives to locate one of the machines, namely, the multicolour function station. This means that the Department, with all the resources and the time at its disposal since the action was launched in January 2004, could if it wanted to, have located the equipment of which it was, after all, the custodian. The Department’s obstructive conduct includes an outrageous interpretation of the contract of employment of their employee (Memory), to mean that she was effectively forbidden from testifying about the whereabouts of the equipment, causing her to fear for her job if she were to testify. [20] Both parties are successful. By comparison, the Defendant has achieved more success than the Plaintiff. The success of the Defendant would ordinarily warrant a consideration of some cost order in his favour. However, the aforementioned conduct of the Defendant’s officials calls for a sanction in the form of denying the Defendant whatever costs it would ordinarily have been considered for. The Defendant’s conduct is, however, not so serious as to justify burdening him with all the costs. Order [21] In the result, the following order is made: All the Plaintiff’s claims for the payment of arrear rental are dismissed; The Defendant is directed to return to the Plaintiff all the machines to which the master rental agreements between Technofin and the Department relate, excluding the Canon NP 6050 photocopier with serial number CDB 09815; and Each party is to pay its and his own costs, including the costs reserved in terms of Zwiegelaar AJ’s order. __________________ M.T.R. MOGOENG JUDGE PRESIDENT OF THE HIGH COURT APPEARANCES DATE OF HEARING : 07 FEBRUARY 2006 DATE OF JUDGMENT : 02 MARCH 2006 COUNSEL FOR PLAINTIFF : ADV J. MARAIS SC COUNSEL FOR DEFENDANT : ADV L. DIKOLOMELA ATTORNEYS FOR PLAINTIFF : KGOMO, MOKHETLE & TLOU ATTORNEYS (Ins. by Shepstone & Wylie Attorney) ATTORNEYS FOR DEFENDANT : STATE ATTORNEY

Similarly, all the 13 master rental agreements are invalid irrespective of how harsh such a finding of invalidity might be to the Plaintiff. For these reasons, the question in paragraph 1 above, has to be answered affirmatively, that is, in the Defendant’s favour.

Estoppel and ostensible authority

[14] The alternative contention advanced by the Plaintiff in support of its claims is that the circumstances surrounding the conclusion of those agreements demonstrate, quite clearly, that the Department’s officials represented to Technofin’s officials that the Department was duly authorised to conclude the master rental agreements in question. Mr Marais further submitted that such representation induced the lessor (to its prejudice) to deliver numerous machines in the belief that it could rely upon its rights as contained in the master rental agreements. For these reasons, so goes the submission, the Department must be estopped from raising the defence that its officials and the Department itself lacked the authority to conclude the agreements.

[15] The reason for the Supreme Court of Appeal’s rejection of the same contention in the Contractprops case is also apposite in this case. A state of affairs prohibited by law in the public interest cannot be perpetuated by reliance upon the doctrine of estoppel. This Court may not legitimise the usurpation, by the Department, of the power of the tender board conferred upon it in the interests of the public. The fact that Technofin and by extension the Plaintiff was misled into believing that the Department had the power to conclude the agreements is regrettable. The resultant prejudice does not, however, detract from the fact that the master rental agreements were concluded ultra vires the powers of the Department and that those agreements cannot be allowed to stand as if the Department acted within its powers.17

[16] A related submission made in support of the validity of the agreements is that of ostensible authority. NBS Bank Ltd v Cape Produce Co. (Pty) Ltd & Others18 and Glofinco v ABSA Bank Ltd t/a United Bank19 were relied on essentially to make the point that the Department held itself out as an entity which was clothed with the requisite authority to enter into binding agreements on its own behalf with outsiders, and that the internal limitations or arrangements of the Department or Government should not be enforced to the prejudice of outsiders. This submission clearly misses the point which is, that the provisions of the North West Tender Board Act are not an internal limitation or arrangement within the Department of Education, Sport and Recreation or the Provincial Government to which only its members are privy. It is the law that is accessible to any member of the public and which the public and the corporate world are encouraged and expected to know. The submission that the authority or lack thereof by the officials of the Department is an internal limitation must, therefore, fail. Besides, ostensible authority and estoppel are so closely related that the one cannot really be an alternative to the other. The ostensible authority contention must fail for the same reasons the estoppel alternative failed.

[17] Consequently, all the claims for the payment of arrear rental stand to be dismissed for the Department’s want of authority or power to conclude the 13 master rental agreements.

The return of the merx

[18] The issue that stands on a different footing is the return of the equipment to which the 13 master rental agreements relate. It is undisputed that the Provincial Department of Social Services returned the Canon NP 6050 photocopier with serial number CDB 09815 to the Plaintiff on 22 November 2005. This is one of the subject-matters of the 13 master rental agreements which the Department claimed were not delivered and that it did not, therefore, know their whereabouts. It has also come to light that Government has in its possession and has undertaken to return to the Plaintiff, a multi-colour function station model CLS 700 with serial number UKR 03912, although logistical problems frustrated attempts to return it to the Plaintiff. All the machines which are the subject-matter of these agreements were evidently delivered to the Defendant at one stage or the other. These machines belong to the Plaintiff and must accordingly be returned to it. It is immaterial which entity or Government Department the Department of Education, Sport and Recreation chose to give all or some of the equipment to after taking delivery of them. It remains the Defendant’s responsibility to locate all the outstanding equipment and give them back to the plaintiff. Accordingly, the Defendant is obliged to return the rest of the equipment to the plaintiff.

Costs

[19] The Defendant’s officials have been very difficult and indeed very uncooperative in all the attempts made by the Plaintiff to locate the machines which had no doubt been delivered by Technofin to the Defendant. When asked by the Plaintiff about the whereabouts of the equipment, the Department made no effort to locate the machines but was merely content with washing its hands of the transactions. It took very little effort by the Plaintiff’s legal representatives to locate one of the machines, namely, the multicolour function station. This means that the Department, with all the resources and the time at its disposal since the action was launched in January 2004, could if it wanted to, have located the equipment of which it was, after all, the custodian. The Department’s obstructive conduct includes an outrageous interpretation of the contract of employment of their employee (Memory), to mean that she was effectively forbidden from testifying about the whereabouts of the equipment, causing her to fear for her job if she were to testify.

[20] Both parties are successful. By comparison, the Defendant has achieved more success than the Plaintiff. The success of the Defendant would ordinarily warrant a consideration of some cost order in his favour. However, the aforementioned conduct of the Defendant’s officials calls for a sanction in the form of denying the Defendant whatever costs it would ordinarily have been considered for. The Defendant’s conduct is, however, not so serious as to justify burdening him with all the costs.

Order

[21] In the result, the following order is made:

All the Plaintiff’s claims for the payment of arrear rental are dismissed;

The Defendant is directed to return to the Plaintiff all the machines to which the master rental agreements between Technofin and the Department relate, excluding the Canon NP 6050 photocopier with serial number CDB 09815; and

Each party is to pay its and his own costs, including the costs reserved in terms of Zwiegelaar AJ’s order.

__________________

M.T.R. MOGOENG

JUDGE PRESIDENT OF THE HIGH COURT

APPEARANCES

DATE OF HEARING : 07 FEBRUARY 2006

DATE OF JUDGMENT : 02 MARCH 2006

COUNSEL FOR PLAINTIFF : ADV J. MARAIS SC

COUNSEL FOR DEFENDANT : ADV L. DIKOLOMELA

ATTORNEYS FOR PLAINTIFF : KGOMO, MOKHETLE & TLOU ATTORNEYS

(Ins. by Shepstone & Wylie Attorney)

ATTORNEYS FOR DEFENDANT : STATE ATTORNEY

1. (a) 6 printers at R4 240.80 pm; (b) 1 computer & 1 laser printer at R513.00 pm; (c) 6 computers at R1 573.20 pm; (d) 1 computer at R513.00 pm; (e) 1 photocopier at R5 142.86 pm; (f) 2 fax machines at R1 083.00 pm; (g) 3 pentium notebooks at R1 539.00pm; (h) 1 multi-colour function station at R4 317.26pm; (i) 6 pentium notebooks at R3 078.00pm; (j) 6 pentium notebooks at R3 078.00 pm; (k) 1 fax machine at R682.86 pm; (l) 12 control cards at R1 368.00 pm; (m)1 copier at R782.04 pm.

1. (a) 6 printers at R4 240.80 pm; (b) 1 computer & 1 laser printer at R513.00 pm; (c) 6 computers at R1 573.20 pm;

(d) 1 computer at R513.00 pm; (e) 1 photocopier at R5 142.86 pm; (f) 2 fax machines at R1 083.00 pm; (g) 3 pentium

notebooks at R1 539.00pm; (h) 1 multi-colour function station at R4 317.26pm; (i) 6 pentium notebooks at R3 078.00pm;

(j) 6 pentium notebooks at R3 078.00 pm; (k) 1 fax machine at R682.86 pm; (l) 12 control cards at R1 368.00 pm;

(m)1 copier at R782.04 pm.

2. Act No. 3 of 1994.

3. Those other issues which are neither related to the central issue nor the validity or otherwise of the cession are: (a) the acting Chief Director’s authority to sign agreements; (b) estoppel; (c) whether or not there was delivery of the equipment; (d) whether or not the agreements were tainted with fraud; and (e) whether or not the rental allegedly outstanding was correctly calculated.

3. Those other issues which are neither related to the central issue nor the validity or otherwise of the cession are: (a) the

acting Chief Director’s authority to sign agreements; (b) estoppel; (c) whether or not there was delivery of the

equipment; (d) whether or not the agreements were tainted with fraud; and (e) whether or not the rental allegedly

outstanding was correctly calculated.

4. 2001 (4) SA 142 (SCA).

5. Act No. 2 of 1994.

6. I should in no way be understood to be suggesting that the Eastern Cape Act was necessarily used as a model or that it was even considered at all. The point being made is simply that the import of s 4(1) of the Act must not be understood, in the light of Contractprops, to be any less exclusive than in the Eastern Cape Act.

6. I should in no way be understood to be suggesting that the Eastern Cape Act was necessarily used as a model or that it

was even considered at all. The point being made is simply that the import of s 4(1) of the Act must not be understood,

in the light of Contractprops, to be any less exclusive than in the Eastern Cape Act.

7. Contractprops supra at para (5).

8. The Provincial Tender Board Act (Eastern Cape), Act No. 2 of 1994 was repealed by the Provincial Tender Board Repeal Act (Eastern Cape), 6 of 2004 which commenced on 28 December 2004.

8. The Provincial Tender Board Act (Eastern Cape), Act No. 2 of 1994 was repealed by the Provincial Tender Board

Repeal Act (Eastern Cape), 6 of 2004 which commenced on 28 December 2004.

9. Section 4 (1)(h) of the North West Tender Board Act No. 3 of 1994.

10. See Contractprops supra at para 13.

11. See s 4 (1) of the North West Tender Board Act No. 3 of 1994.

12. See Contractprops supra at para 6.

13. See Contractprops supra at para 6.

14. See Contractprops supra at para 7.

15. See Contractprops supra at para 8.

16. In Contractprops supra at para 9.

17. See para 11, 12 and 13 of Contractprops supra.

18. 2002 (1) SA 396 (SCA).

19. 2002 (6) SA 470 (SCA).