Transnet SOC Limited v IGS Consulting Engineers CC and Others (34688/2017) [2019] ZAGPJHC 527 (11 December 2019)

Transnet SOC Limited v IGS Consulting Engineers CC and Others (34688/2017) [2019] ZAGPJHC 527 (11 December 2019)

The court found that all five contracts between Transnet and the respondents were unlawfully awarded, primarily due to the submission of fraudulent B-BBEE certificates by IGS and the systematic bypassing of compulsory procurement procedures. The relationship between Mr Msagala (Transnet CEO) and Mr Sithole (IGS) was corrupt and facilitated the unlawful awarding of contracts. The contracts contravened s 217(1) of the Constitution, the PFMA, Treasury Regulations, and the CIDB Act. The delay by Transnet in launching the application was reasonable given the complexity and ongoing nature of the conduct. The court held that simply setting aside the contracts would not be just and equitable; the...

Citation
[2019] ZAGPJHC 527
Parties
Applicant: Transnet SOC Limited; Respondent: IGS Consulting Engineers CC; Respondent: Turnmill Proquip Engineering (Pty) Ltd; Respondent: IGS Join Venture; Respondent: WK Construction SA (Pty) Ltd
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
11 December 2019
Case Number
34688/2017
Procedural Posture
Review Application / Judgment
Outcome
Application granted. All five contracts declared unlawful and set aside. Respondents ordered to account for and repay profits earned under the contracts. Costs awarded against first and second respondents, including costs for two counsel.
Judges
Vally
Legal Topics
Public Procurement, Unlawful Contract, Fraudulent B Bbee Certificates, Joint Venture Liability, Setting Aside Contracts, Just and Equitable Remedy
Administrative Law Commercial and Corporate Civil Procedure Public Procurement Unlawful Contract Fraudulent B Bbee Certificates Joint Venture Liability Setting Aside Contracts +1 more

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Parties

Transnet SOC Limited

Applicant

IGS Consulting Engineers CC

Respondent

Turnmill Proquip Engineering (Pty) Ltd

Respondent

IGS Join Venture

Respondent

WK Construction SA (Pty) Ltd

Respondent

Procedural Posture

Review Application / Judgment

Legal Issues

  1. 1 Whether the five contracts concluded between Transnet and the respondents were unlawful and should be set aside.
  2. 2 Whether the submission of fraudulent B-BBEE certificates by IGS rendered the contracts invalid.
  3. 3 Whether the internal procurement procedures and legal prescripts were breached in awarding the contracts.

Ratio Decidendi

The court found that all five contracts between Transnet and the respondents were unlawfully awarded, primarily due to the submission of fraudulent B-BBEE certificates by IGS and the systematic bypassing of compulsory procurement procedures. The relationship between Mr Msagala (Transnet CEO) and Mr Sithole (IGS) was corrupt and facilitated the unlawful awarding of contracts. The contracts contravened s 217(1) of the Constitution, the PFMA, Treasury Regulations, and the CIDB Act. The delay by Transnet in launching the application was reasonable given the complexity and ongoing nature of the conduct. The court held that simply setting aside the contracts would not be just and equitable; the...

Court Disposition

Application granted. All five contracts declared unlawful and set aside. Respondents ordered to account for and repay profits earned under the contracts. Costs awarded against first and second respondents, including costs for two counsel.

Orders

  • The instruction by Transnet to WKSA to sub-contract to IGS is declared unlawful.
  • First respondent to file an audited statement of expenses, income, and net profit under the first contract within sixty days.