Zonke Monitoring Systems (Pty) (Ltd) v National Gambling Board and Others (64137/2017) [2018] ZAGPPHC 909 (2 May 2018)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

CASE NO:64137/2017

REPORTABLE : NO

OF INTEREST TO OTHERS JUDGES: NO

REVISED

DATE: 2/05/2018

In the matter between:

ZONKE MONITORING SYSTEMS (PTY)(LTD)

Applicant

and

NATIONAL GAMBLING BOARD

First Respondent

CAROLINE KONGWA NO

Second Respondent

MINISTER OF TRADE AND INDUSTRY Third Respondent

ROUTE MONITORING Fourth Respondent

JUDGMENT

[1] This is an application to review and set aside a decision to award the fourth respondent a tender to supply, install, commission, operate, manage and maintain a National Central Electronic Monitoring System for Limited playout Machines.

[2] Issues to be decided

2.1 Whether the applicant has locus standi to bring this application;

2.2 Whether the second respondent had the power to award the tender which is impugned in these proceedings;

2.3 Whether a review application can be brought against the tender when the applicant has failed to apply for the review and setting aside of the decision to appoint the second respondent in her capacity as administrator;

2.4 If it is found that the second respondent did not have the power to award the impugned tender and that this review application is

properly brought against the decision to award the tender, whether the award should be set aside or whether (a) the court should

exercise its discretion against setting aside the award or (b) the court should suspend its declaration of invalidity for a period of one year.

[3] In respect of the counter-application

3.1 The merits of the counter-application are now moot.

3.2 But, since the first and second respondents persist in seeking the costs of the application, it will be necessary for the court to decide;

3.2.1 whether the transitional arrangements applicable to the service level contract between the applicant and the first respondent were applicable in this case.

3.2.2 Whether, if so, the requirements applicable to the appointment of a transitional committee were complied with in this case.

3.2.3 Whether, if so, the applicant complied with its transitional obligation in terms of the service level contract

The factual background

[4] Section 27 of the the National Gambling Act[1](“the NG act’’) provides that the first respondent the National Gambling (‘’the board’), must establish and maintain a national central electronic monitoring system system (“the NCEMS”) for detecting and monitoring events associated with any limited pay-out machine (a gambling machine with a restricted prize), and analysing and reporting that data. The board may contract with any person to supply any or all of the products or services to fulfil its obligations..[2]

[5] This application is concerned with the tender awarded by the board to the fourth respondent Route Monitoring (Pty Ltd). The applicant, Zonke Monitoring System (Pty) Ltd, seeks to review and set-aside the decision by the second respondent, Ms Caroline Kongwa (“Kongwa”) awarding the tender to Route Monitoring.

[6] The award of the tender followed on Kongwa issuing the RFP on 2 December 2016. Thabong and Route Monitoring were two of the three parties that submitted tender. The other unsuccessful bidder was the fifth respondent, Pay Tronic Systems (Pty) ltd (“Paytronix”). Kongwa approved Route Monitoring as the preferred NCEMS operator. The tender was awarded to Route Monitoring on 31 August 2017.

[7] Since 19 August 2014 the third respondent the Minister of Trade and Industry (“the minister”), has not appointed a National Gambling Board.

[8] Section 64 of the NG Act provides that the National Gambling Board is retained under the NG Act and is a juristic person. The·board has the various powers and duties as spelt out in section 5 of the NG Act.

[9] Section 67 of the NG Act provides for the composition of the board consisting of a Chairperson, a Deputy Chairperson and not more than three other members.

[10] The board is required to appoint a suitably qualified and experienced person as Chief Executive Officer (CEO) who is subject to the direction and control of the board and responsible for all financial administrative responsibilities pertaining to the functions of the board.[3]

[11] The Minister dissolved the board on 19 August 2014 after the suspension and resignation of the members on the basis of allegations of irregularity. The CEO had resigned before this in March 2014. The Minister, on 3 September 2014, seconded Kangwa and another official, Mr Baleni, to the National Gambling Board and appointed them as “co-administrators”. Baleni was employed as the Chief Operating Officer for the consumer and corporate and regulatory division of the Department of Trade and Industry and Kongwa was employed as Chief Director, Legal Services.

[12] The minister appointed the co administrators in terms of section 15(3) of the Public Services Act 103 of 1994. The minister says that the co-administrators were also designated as the accounting authority of the board in terms of section 49 of the Public Finance Management Act[4] (“the PFMA”).

[13] Since 2014 no new board has been appointed. The minister explained that the reason for not appointing a new board is that the previous board had a record of impropriety and in his view the model under the Gambling Act requiring a board is obsolete, and Legislative measures are being put in place to effect a charge.

[14] Section 51 of the PFMA delimits the responsibilities of accounting authorities. They relate inter alia to maintaining effective systems of financial and risk management and internal control, an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost­effective and a system for properly evaluating all major capital projects.Section 51 (1) (h) of the PFMA provides that an accounting authority for a public entity “must comply and ensure compliance by the public entity, with the provisions of the Act and any other legislation applicable to the public entity.”

[15] Kongwa approved Route Monitoring as the preferred NCEMS operator and advised Route Monitoring accordingly. This is the decision constituting administrative action which Zonke seeks to review.

[16] The view of the minister is that any absence of a board, triggers section

•I

(b) of the PFMA and that this interpretation is supported by section 49 (3) ofIthe PFMA, which permits the relevant treasury, in exceptional circumstances to approve or instruct that another functionary of a public entity must be the accounting authority for that public entity, which is what has happened here.

[17] Zonke contends that Kongwa has no legal power to award contracts in relation to the NCEMS and that sections 27 (2) (c) and 65 (1) (c) of the 2004 Gambling Act expressly vest the power to contract in relation to the NCEMS in the National Gambling Board ("the Board") properly constituted in terms of the Gambling Act 7 of 2004.

[18] Zonke is the incumbent operator of the NCEMS. After certain renewals of the SLC, it was agreed between Zonke and the Board that Zonke’s contract would come to an end in December 2015.Various further extensions of the SLC were agreed, leading to the ultimate position that Zonke’s contract expires on.

Locus Standi

[19] Zonke claims that it has a standing both in its own interest and in the public interest.

[20] The respondents contends that Zonke did not bid in respect of the tender and has no interest in the outcome of that process (own interest standing or public interest standing). In Its founding affidavit Zonke concedes that it did not participate in the tender process which it now seeks to review.

Own interest

[21] Zonke contends that it stands to be held to transitional obligations if the impugned decision is not set aside and it cannot be held to invalid obligations therefore it has standing to bring this review

for that reason alone.

[22] In Giant Concerts[5] the Constitutional Court held that "w here a litigant acts solely in his or her own interest, there is no broad or unqualified capacity to litigate against illegalities". It further held that:

“an own interest litigant may be denied standing even though the result could be that an unlawful decision stands. This is not illogical. As the Supreme Court of Appeal pointed out at standing determines solely whether this particular litigant is entitled to mount the challenge, a successful challenge to a public decision can be brought only if the right remedy is sought by the right person in the right proceedings.””

[23] It was established by law that an own interest litigant had no broad or unqualified capacity to litigate against illegalities, but had to demonstrate that its interests or potential interests were directly affected by the unlawfulness sought to be impugned.[6]

[24] The basis upon which Zonke asserts own interest standing is that “it stands to be held to transitional obligations if the impugned decision is not set aside.”

[25] The transitional obligation arise because of the termination of Zonke's contract by efluxion of time and its failure to submit a tender. It does not arise from the tender process as such.

[26] Zonke has no interest in the tender. It was not itself, a bidder. Its position is further remove than that of the applicant in Giant Concerts and Areva. The Constitutional Court held that those

applicants did not enjoy the necessary standing to challenge an allegedly unlawful decision, even after regard was held to the public interest.

[27] Public interest

In determining whether section 38 (d) confers standing upon an applicant this court shall assess whether the applicant is genuinely acting in the public interest.[7] In doing so the following factors are considered;

27.1 whether there is another reasonable and effective manner in which the challenge can be brought;

27.2 the nature of the relief sought;

27.3 the extent to which it is of general and prospective application and the range of persons or groups who may be directly or indirectly affected by any order made by the court;

27.4 he opportunity that those persons or groups ·have had to present evidence and argument to the court; and

27.5 the unreliability of the people affected by the issue.

[28] Zonke financially benefited from decisions that it contends were unlawful (but does not seek to set aside in these proceedings, and sought to bring this review application when its interest might be adversely affected. If Zonke believed that the ministers appointment of Ms Kongwa were unlawful, it advances no reason as to why it chose,

at the time that its contract for the NCEMS was being continually extended to take no action.

[29] In this application Zonke seeks only to prevent Route Monitoring from

obtaining a contract to which Zonke as a non bidder, has no entitlement. The disappointed tenderers that submitted bids could themselves have instituted proceedings to challenge the tender process.

[30] Zonke does not profess to be acting

30.1 on behalf of another person who cannot act in their own name;

30.2 as a member of, or in the interest of a group or class of persons, or as an association acting in the interests of its members. Zonke does not espouse any public interest. It exposes an unbridled self interest manifested by its failure to attack the appointment of Ms Kongwa itself so as not to disturb its own contract extensions, which on Zonke's own argument must be invalid.

[31] Where a litigant has failed to show that it has standing, the court should as a general rule dispose of the matter without entering the merits and that it should only enter the merits in exceptional cases or where the public interest really cries out for that. In my view this is not an exceptional case where the public interest cries out for that.

The Counter-claim

[32] The first and second respondents have launched a counter-application.

In that application they seek relief;

32.1 declaring that the transitional Committee was properly established on 15 September 2017.

32.2 ordering Zonke to comply with ‘’its contractual obligations’ towards the NG B respondents.

[33] At the time of the preparation of the answering affidavit by the first and second respondents, Zonke was refusing to abide by its contractual duty to facilitate the new service provider. They were later advised that Zonke is co-operating. The counter-application was therefore necessary at that time. The merits of the counter-application are now moot.

Order

[34] In the results;

1. The application is dismissed with costs, such costs to include the costs of two counsel where applicable and the costs in the counter claim.

J.J STRIJDOM

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTEND DIVISION, PRETORIA

Heard on:

Delivered: 09 February 2018

For the Applicant:

Adv Chaskalson SC

Instructed by: Baker Mckenzie Attorneys

For the Respondent: Adv J Motepe SC,ADV W

Instructed by: Geldenhuys

Malatji Inc

For the third Respondent: Adv N.H Maenetje SC, Adv M Stubbs

Instructed by: The State Attorney

For the fourth Respondent: Adv

M Antonie SC,Adv Ben Zeeu

Instructed by: Maharaj and Associates Inc

[1] Act 7 of 2004.

[2] Section 27 (2) of the NG act

[3] Section 73 (1) (a) of the NG act.

[4] Act 1 of 1999

[5] 2013 (3) BCLR 251 (CC)

[6] Areva NP Incorporated in France v Eskom Holdings SOC Ltd and Another 2017 (6) SA621(CC)

[7] Lawyers for Human Rights and another v Minister of Home Affairs [2004] ZACC 12; 2004 (4) SA 125 (CC)