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[2015] ZASCA 200
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Tasima (Pty) Ltd v Department of Transport (792/2015) [2015] ZASCA 200; [2016] 1 All SA 465 (SCA) (2 December 2015)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 792/2015
In
the matter between:
TASIMA
(PTY) LTD
APPELLANT
and
THE
DEPARTMENT OF TRANSPORT
FIRST RESPONDENT
THE
DIRECTOR-GENERAL: DEPARTMENT
OF
TRANSPORT
SECOND RESPONDENT
THE
MINISTER OF
TRANSPORT
THIRD RESPONDENT
WERNER
EDUARD KOEKEMOER
FOURTH RESPONDENT
ROAD
TRAFFIC MANAGEMENT CORPORATION
FIFTH RESPONDENT
COLLINS
LETSOALO
SIXTH RESPONDENT
KEVIN
JOSHUA KARA-VALA
SEVENTH RESPONDENT
MORNE
GERBER
EIGHTH RESPONDENT
GILBERTO
MARTINS
NINTH RESPONDENT
CHRIS
HLABISA
TENTH RESPONDENT
MAKHOSINI
MSIBI
ELEVENTH RESPONDENT
Neutral
Citation:
Tasima
(Pty) Ltd v Department of Transport
(792/2015)
[2015] ZASCA 200
(2 December 2015)
Coram:
Brand,
Cachalia, Majiedt, Saldulker, Mbha JJA
Heard:
23
November 2015
Delivered:
2 December 2015
Summary:
Administrative Law
– Extension of contract between appellant and first
respondent – court orders compelling respondents
to comply with
contract during period of extension – application for committal
of contempt of those orders and related relief
– contempt not
dependent on validity of extension – counter-application to set
extension aside – time limit imposed
by s 7 of PAJA.
ORDER
On
appeal from:
North
Gauteng Division of the High Court, Pretoria (Hughes J, sitting as
court of first instance):
It
is ordered that:
(a)
The appeal against both the dismissal of the main application and the
order granted in terms of the counter-application is upheld
with
costs, including the costs of two counsel, against the first and
fifth respondents, jointly and severally.
(b)
The order of the court a quo is set aside and replaced with the
following:
‘
An
order is issued in the following terms:
1.
Declaring:
(a)
the first and second respondents to be in breach and contempt of:
(i)
paragraph 1.1 of the order of this court issued under case number
44095/2012, handed down by Mabuse
J on 17 October 2012 (the Mabuse
Order);
(ii) paragraph
3 of the order of this court issued under case number 44095/2012
handed down by Strijdom
AJ on 26 March 2013 (the Strijdom Order);
(iii) paragraphs 5
and 6 of the order of this court issued under case number 44095/2012
handed down by Fabricius
J on 27 August 2013 (the Fabricius Order);
(iv) paragraph 1 of
the order of this court issued under case number 44095/2012 handed
down by Rabie J on 21 January
2014 (the Rabie Order);
(b) the fifth
and eleventh respondents to be in breach and contempt of:
(i)
paragraphs 5 and 6 of the Fabricius Order; and
(c) the tenth
respondent to be in breach and contempt of:
(i)
paragraph 1.1 of the Mabuse Order;
(ii) paragraph
3 of the Strijdom Order;
(iii) paragraphs 5
and 6 of the Fabricius Order;
(iv) paragraph 4.1
of the order of this court issued under case number 44095/2012 handed
down by Nkosi J on 5
November 2013 (the Nkosi Order);
(v) paragraph
1 of the Rabie Order;
2.
Ordering that:
(a)
no transfer of the eNaTIS and the services (as defined in the turnkey
agreement for the provision of
the eNaTIS system (Contract RT1194KA)
dated 3 December 2001, as subsequently amended and extended ( the
turnkey agreement) may
take place except in terms of the transfer
management plan envisaged in schedule 15 to the turnkey agreement;
(b)
for the duration of the transfer of the eNaTIS and the services:
(i) the
applicant is to be paid, by the first respondent, for all services
rendered under the agreement,
in accordance with, inter alia, the
terms of the turnkey agreement and paragraph 1.2 of the Mabuse Order;
(ii) all
purchase requisition orders are to be processed in accordance with,
inter alia, the terms of the
turnkey agreement and paragraph 4 of the
Nkosi Order; and
(iii) all material
contracts and agreements required to be approved by the first
respondent will be so approved
within five days of the request by the
applicant;
(c)
the first, second, fifth, tenth and eleventh respondents are
interdicted from taking any steps to implement
the purported transfer
alluded to in the letters dated 24 February 2015, 25 February 2015
and 4 March 2015 (the transfer correspondence,
which respectively
comprise annexes FM27, FM25, and FM28 to the supporting affidavit of
Fannie Lynen Mahlangu dated 12 March 2015),
or to implement any
transfer of the eNaTIS, the services (as defined in the turnkey
agreement) or any related services contrary
to 2.1 above;
(d)
the fifth respondent is to desist from advertising for any eNaTIS
related positions until at least a
transfer management plan has been
finalised in terms of the turnkey agreement;
3.
Ordering that:
(a)
the second and tenth respondents be committed to imprisonment for a
period of 30 days.
(b)
the order in paragraph 3(a) above will not come into operations
unless there is a breach of the order
in paragraph 2(c) above;
(c)
a warrant of committal is to be issued by this
court on the same papers, duly supplemented as necessary,
if the
first, second and tenth respondents breach the order in paragraph
2(c) above;
4.
Ordering the first and fifth respondents, jointly and severally, to
pay the applicant’s
costs of the application dated 12 March
2015, including the costs of two counsel.
5(a)
Dismissing the first respondent’s counter-application dated 26
March 2015;
(b)
Ordering the first respondent to pay the applicant’s costs of
the counter-application,
including the costs of two counsel.
JUDGMENT
Brand
JA (Cachalia, Majiedt, Saldulker, Mbha JJA concurring):
[1]
The appellant, Tasima (Pty) Ltd (Tasima), brought an application in
the North Gauteng High Court for relief essentially twofold
in
character. First, to declare five of the eleven respondents in
contempt of no fewer than seven court orders and, secondly, to
interdict all the respondents from acting in breach of these court
orders. The orders are defined in the papers by reference to
the
judges who granted them. I propose to do the same. To the identity of
the respondents, I shall presently return. But for purposes
of
introduction it suffices to describe two of them only, namely, the
first respondent, which is the Department of Transport (the
Department) and the fifth respondent, which is the Road Traffic
Management Corporation (RTMC) that owes its corporate existence
to
s 3 of the Road Traffic Management Act 20 of 1999.
[2]
The various court orders relied upon for the contempt application had
their origin in a turnkey agreement between Tasima and
the Department
concluded on 3 December 2001. It is common cause that the agreement
would have expired in May 2007, but for an extension
of the contract
period relied upon by Tasima. The application was opposed by a number
of respondents. In addition, the Department
brought a
counter-application to review and set aside the decision to extend
the contract period upon which Tasima’s application
relied. In
the court a quo the matter came before Hughes J, who dismissed
Tasima’s application and granted the Department’s
counter-application, in both instances with costs. The appeal against
that order is with the leave of the court a quo.
Background
[3]
The exact nature of the dispute between the parties and the issues
that arose for determination will be better understood against
the
factual background that follows. It all started with a tender invited
by the Department for the redevelopment and implementation
of the
National Traffic Information System. The tender was eventually
awarded to Tasima. Tasima and the Department accordingly
entered into
the turnkey agreement for the provision of the electronic National
Traffic Information System (eNaTIS), on 3 December
2001. eNaTIS is
responsible for, amongst other functions, the management of all
licensing requirements and traffic systems. It
allows the Department
to administer, across all nine provinces, the licensing of all motor
vehicles; driver’s tests; learner
licence tests; contraventions
of road traffic legislation; the roadworthiness of vehicles; and so
forth. It acts as the interface
amongst the Department, all licensing
institutions and municipalities; a variety of institutional users
such as the South African
Police Service; motor manufacturers; the
banking industry; and the general public. By all accounts the eNaTIS
system is a complex
one. It interacts with over 20 pieces of
legislation; it manages a vehicle population of over 11,3 million
vehicles; it processes
380 million transactions per year at an
average of 1,6 million transactions per business day; it comprises
millions of lines of
computer code and is imbedded into the national
economy. The contract is evidently a very valuable one.
[4]
Although the turnkey agreement was concluded on 3 December 2001, it
only came into operation on 1 June 2002. In terms of clause
4, it was
intended for a fixed period of five years only, which would expire on
31 May 2007. The parties clearly contemplated,
however, that due to
the complexity and wide-ranging import of the eNaTIS system, its
transfer from Tasima to the Department or
a third party, could not
occur overnight. Hence clause 26 of the agreement provides:
‘
26
Transfer management upon termination
Upon
termination of this agreement for any reason whatsoever and howsoever
arising, in order to ensure the smooth and uninterrupted
transition
of the services from [Tasima] to the State, or its nominated
contractor, [Tasima] shall comply with the transfer management
provisions set out in schedule 15.’
Amongst
the pertinent provisions of schedule 15 is the introduction in
paragraph 1 which reads:
‘
In
view of the strategic importance of the [eNaTIS system] to the State,
it is necessary to make provision for the orderly transfer
of this
[system] and services provided in respect thereof from [Tasima] to
the State or a third party provider should this agreement
or any part
thereof terminate or expire for any reason whatsoever. This schedule
contains the provisions relating to such a transfer.’
[5]
Clauses 2.2 and 2.3 of the turnkey agreement provide that, within 90
days after termination of the agreement, the Department
can request
from Tasima a transfer management plan meeting and the Department and
Tasima must agree on a transfer management plan
within 30 days of
such request. This transfer management plan must, in turn, provide
timeframes for transfer, similar to the Migration
plan (which
governed the original transfer of the system to Tasima), and must be
carried out in a timeframe substantially similar
to that delineated
in the Migration plan. It is common cause that the Migration plan
endured for a period of five years from 2002
to 2007.
[6]
On the eve of the expiry of the agreement on 31 May 2007, Tasima made
written representations to the then Director-General,
Ms Mpumi Mpofu,
for the agreement to be extended beyond that date. But its
representations did not find favour with her. She accordingly
wrote
to Tasima that the agreement would terminate on 31 May 2007 and that
the eNaTIS system had to be transferred to the Department
in
conformity with clause 26 and schedule 15. But the Department never
requested the transfer management meeting contemplated by
clause 2.2
of schedule 15. Both Tasima and the Department accept that the
contract then continued on a month-to-month basis with
no stipulated
time period.
[7]
Ms Mpofu’s contract as Director-General came to an end on 30
October 2009 and Mr George Mahlalela was appointed in her
stead. On
12 April 2010 Tasima made written representations to the then Deputy
Director-General, Mr Zakhele Thwala, for the Department
to consider
giving Tasima an extension of the contract for a further period of
five years from 1 May 2010 and that it be permitted
to develop new
software it would maintain for use by the public. Mr Mahlalela
accepted the recommendation and informed Tasima by
letter dated 12
May 2010 that its contract was extended to 30 April 2015.
[8]
The extension was challenged by the Department’s Chief
Financial Officer, Mr Collins Letsoalo, who was also the acting
Chief
Executive Officer of RTMC. He wrote to Tasima on 21 May 2010, and
again on 27 May 2010, advising it to ignore Mr Mahlalela’s
letter, since that letter, he asserted, had been withdrawn. This was
followed by a further letter by Mr Mahlalela to Tasima, dated
18
August 2010, in which he confirmed the extension of the contract,
advised it to ignore any instructions to the contrary from
anyone
else in the Department. On 22 June 2010 the Minister of Transport
confirmed in Parliament that the Director-General had
extended the
agreement and defended the extension essentially on the basis of the
importance of the eNaTIS system and the retention
of special skills
employed by Tasima in its operation. Mr Mahlalela’s contract as
Director-General expired on 28 February
2013.
[9]
The next episode in the saga occurred in March 2012 when Tasima
received a letter from the Department informing it that the
turnkey
agreement would terminate on 31 May 2012. The reasoning underlying
that view was formulated thus:
‘
The
Department of Transport is of the opinion that the contract expired
on May 31 2007, and that transfer provisions were invoked
that
authorised the Department to transfer eNaTIS’ services to the
Department and placed an obligation on the service provider
to
continue with the support of the system until transfer is completed.
The maximum period for transfer to be completed in five
years
expiring on 31 May 2012.’
[10]
Tasima’s response was twofold. First, it invoked the dispute
resolution mechanism provided for in clause 24, read with
schedule 13
of the turnkey agreement. Secondly, it brought an application for an
order that the Department be directed to perform
its obligations in
terms of the agreement, pending the finalisation of the dispute
resolution proceedings which it had instituted.
On 7 August 2011
Teffo J granted an interim interdict against the Department which
pendente
lite
preserved
the status quo until the finalisation of the main application. On 17
October 2012 Mabuse J decided the main application
in favour of
Tasima, and granted an order in respect of which, pending the
finalisation of the dispute resolution proceedings instituted
by
Tasima, the Department was directed ‘to perform its obligations
in terms of the agreement’ (the Mabuse J order).
From the
context of Mabuse J’s judgment it is clear that by his
reference to ‘the agreement’ he intended to include
the
alleged extension of the contract period until 30 April 2015
(contended for by Tasima) as well as the period of transition
contemplated in clause 26 and schedule 15. Subsequently, the
Department’s application for leave to appeal against the Mabuse
J order was refused, first by Mabuse J himself and then by this
court. A debate arose on the papers as to who was to blame for
the
fact that the dispute proceedings instituted by Tasima in 2012 had
not yet been finalised. As I see it, however, the outcome
of this
debate is of no consequence. No application was brought to discharge
or terminate the Mabuse J order. So it remains extant.
[11]
Nonetheless, from about September 2012 to about February 2014 the
Department, RTMC and at least some of the other respondents,
have
persistently conducted themselves in a way which, from Tasima’s
perspective, constituted contempt, first of the order
by Teffo J and
then of the order by Mabuse J. An example of such conduct was the
failure by the Department to grant the necessary
authorisations under
the agreement to timeously pay amounts due. Furthermore, the
Department rerouted work under the agreement
away from Tasima to the
RTMC. In consequence, Tasima brought no fewer than seven contempt of
court applications, and succeeded
every time.
[12]
At the beginning of 2015, so Tasima contended, the Department and
RTMC again started behaving in a manner which constituted
contempt of
the Mabuse J order as well as the various court orders that followed.
This gave rise to the present litigation. In
support of its contempt
application Tasima relied in the main on letters and emails sent on
behalf of both the Department and RTMC
which indicated in no
uncertain terms that the former intended to transfer the eNaTIS
system in its totality to the latter with
effect from 1 May 2015. The
basis for this attitude advanced by the respondents was that the
period of the contract, as extended
in 2010, would terminate on 30
April 2015. This, of course, completely ignored the transfer
provisions of schedule 15. In addition
Tasima relied for its contempt
application on RTMC’s advertising in newspapers for positions
associated with the eNaTIS system.
RTMC’s rather cynical answer
to this complaint was that the advertisements were aimed at enabling
it to take over eNaTIS
on 1 May 2015 and that its efforts to do so
proved successful in that ‘170 out of a total of some 230
skilled Tasima employees’
have applied to take up these
positions by 1 May 2015 These actions by the Department and RTMC
formed the foundation not only of
Tasima’s contempt of court
application, but also of its prayers for other related relief
deriving from these orders.
[13]
The Department’s counter-application was for the setting aside,
on the basis of illegality, of the decision by the then
Director-General, Mr Mahlalela, in May 2010 to extend the contract
period for a further five years. This would, according to the
Department, constitute a defence to Tasima’s contempt
applications. This is so, the Department argued, because the legality
of the impugned extension was a prerequisite for the relief sought by
Tasima in its main claim. Conversely, argued the Department,
because
the court would not compel it to continue giving effect to an invalid
agreement. As authority for these propositions the
Department sought
to rely on the recent decision of this court in
Minister
of Transport NO & another v Prodiba (Pty) Ltd
[2015]
2 All SA 387
(SCA).
[14]
The basis of the Department’s legality challenge was formulated
in its supporting affidavit thus:
‘
The
impugned extension was in clear contravention of s 217(1) of the
Constitution in that it was for the contracting of services
without
following a system that is fair, equitable, transparent, competitive
and cost effective.
In
extending this contract Mahlalela failed to comply with Treasury
Regulation 16A6.4, read with Treasury Instruction Note 8 of
2007/2008
which provide that in urgent or emergency cases or in case of a sole
supplier, other means of procurement may be followed
but that the
reasons for deviation should be recorded and approved by the
accounting officer. The proferred reasons were also lacking
in
rationality.
In
terms of s 38(2) of the PMFA [ie Public Finance Management A
ct
1
of 1999] an accounting officer may not commit a department,
trading entity or constitutional institution to any liability for
which
money has not been appropriated. When Mahlalela extended the
contract with effect from 1 May 2010, no money had been appropriated
by the Department for the extended contract.
.
. .
.
. . [A]s a result of this illegal extension the Department has
received negative reporting from the Auditor-General.
.
. . [T]he relevant portion of the Department’s annual financial
statements for the year ended 31 March 2014 . . . [shows]
that the
Department is now forced to shift money from some of its programmes
in order to fund this contract. This is a direct result
of the
failure by Mahlalela to comply with s 38(2) of the PFMA.’
[15]
The court a quo obviously endorsed the Department’s thesis –
also embraced by RTMC – that the setting aside
of the impugned
extension of the contract period would inevitably be the death knell
for Tasima’s main application. For once
it upheld the
counter-application it gave no consideration to the charges of
contempt of court and the related relief sought by
Tasima. With
regard to RTMC the court a quo found another reason why the claim
against it could not succeed, namely, that ‘RTMC
cannot be in
contempt of performance as it was not a party to the agreement’.
Tasima’s
application for committal orders and related relief
[16]
I do not share the court a quo’s view that the setting aside of
the impugned extension would insulate the respondents
from a finding
that they were in contempt of court. On the contrary, as I see it,
the outcome of the review application is entirely
irrelevant to the
question whether the respondents were acting in contempt of the
court’s orders. Should the review application
be successful, it
may impact on the future in that it could serve as a basis for
setting the court orders aside. But unless and
until these orders are
set aside by a court of competent jurisdiction, they stand and must
be obeyed. That much was clearly stated
by Streicher ADP in
Clipsal
Australia (Pty) Ltd & others v GAP Distributors (Pty) Ltd &
others
2010 (2) SA 289
(SCA) para 22. In a constitutional democracy based on
the rule of law, court orders must be complied with by private
citizens and
the State alike. As members of the executive organs of
State, the respondent are held to an even higher standard. Not only
must
they act in strict compliance with court orders, but they are
also bound to facilitate the efficiency of the judicial branch (see
eg
Minister
of Home Affairs & others v Somali Association of South Africa
Eastern Cape (SASA EC) & another
2015 (3) SA 545
(SCA) paras 34-36 and 27; and
Nyanthi
v MEC for the Department of Health, Gauteng & another
2008 (5) SA 94
(CC) para 43). The setting aside of a contract which
forms the basis of a court order, does not negate the force of the
order nor
does it excuse the failure to comply with it.
[17]
The fact that RTMC was not a party to the contract between the
Department and Tasima is, in my view, equally irrelevant to
the
contempt inquiry. First, because Tasima’s case against RTMC was
not based on breach of contract but on delictual liability
arising
from intentional interference with contractual rights (see eg
Dantex
Investment Holdings (Pty) Ltd v Brenner & others NNO
1989 (1) SA 390
(A)). Secondly, and in my view of greater import, is
the consideration that I have mentioned before, namely, that court
orders
must be obeyed even if they are considered to be wrong. Chaos
and disorder will result if people are allowed to defy court orders
with impunity because they are thought to have been wrongly decided
(see eg
Bezuidenhout
v Patensie Sitrus Beherend Bpk
2001
(2) SA 224
(E) 228F-230A).
[18]
Civil contempt is the wilful and
mala
fide
refusal
or failure to comply with an order of court. This was confirmed in
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006
(4) SA 326
(SCA) para 9.
Fakie
also
held that whenever committal to prison for civil contempt is sought,
the criminal standard of proof applies (para 19). A declarator
of
contempt (without imprisonment) and a mandatory order can however be
made on the civil standard (see
Fakie
para
42). The applicant for a committal order must establish (a) the
order; (b) service or notice of the order; (c) non-compliance
with
the terms of the order and (d) wilfulness and
mala
fides
,
beyond reasonable doubt. But, once the applicant has proved (a), (b)
and (c), the respondent bears an evidentiary burden in relation
to
(d) (
Fakie
para
42). Should the respondent therefore fail to advance evidence that
establishes a reasonable doubt as to whether his or her
non-compliance was wilful and
mala
fide
,
the applicant would have proved contempt beyond a reasonable doubt
(
Fakie
paras
22-24).
[19]
I propose to apply these criteria first with reference to the
Department and its two officials, the Director-General and Mr
Hlabisa, against whom committal orders are sought. In doing so, it is
clear to me that the applicant had established requirements
(a), (b)
and (c). The Mabuse J order and the five subsequent contempt orders
were pertinently addressed to the Department and the
Director-General, while the terms of these orders were specifically
rendered applicable to Mr Hlabisa by the order of Nkosi J.
It is
common cause that these orders were served on these respondents and
that they were fully aware of their terms.
[20]
Furthermore, I believe Tasima had demonstrated non-compliance with
the terms of these orders by the Department and its two
officials
concerned. So, for example, these respondents were pertinently
directed in terms of the Mabuse J order to give effect
to the terms
of the turnkey agreement until the dispute resolution proceedings had
been finalised. The Fabricius J order interdicted
them from taking
any steps which would have the effect of rerouting or diverting any
of the works pertaining to the eNaTIS system
away from Tasima. I
agree with Tasima’s argument that the transfer of the whole
eNaTIS system from Tasima to RTMC on 1 May
2015, to which these
respondents committed themselves, clearly constituted non-compliance
with the terms of these court orders.
The contention on behalf of
these respondents that they were not attempting to transfer the
eNaTIS system to RTMC on 1 May 2015,
but that they were only taking
preparatory steps to effect such transfer at a later date, is in my
view rather cynical and unsustainable
on the facts. As to requirement
(d) of
Fakie
,
these respondents gave no valid explanation for their failure to
comply with the orders against them. They sought instead to challenge
the extension of the contract period by way of a counter-application.
In consequence they have failed to discharge the evidentiary
burden
resting upon them to show that their non-compliance was not wilful or
mala
fide
.
It follows that Tasima has succeeded in proving contempt against the
Department and its two officials beyond a reasonable doubt.
[21]
Very much the same considerations apply in respect of RTMC. Although
it was not a party to the Mabuse J order, the subsequent
order by
Fabricius J was pertinently directed against it. In terms of
paragraph 5 of that order the respondents – including
RTMC –
were ‘interdicted from taking any steps which would have the
effect of rerouting or diverting any of the work
(as defined in
paragraph 3 of the order granted by the Hon Mr Acting Justice Strydom
on 26 March 2013) . . .’ An argument
raised on behalf of RTMC
was that the reference to another court order – by Strydom AJ –
which order was not directed
against it, rendered the contents of the
Fabricius J order unclear. I believe, however, that there are two
answers to this argument.
The first is that the deponent to RTMC’s
answering affidavit – Mr Msibi – raised no difficulty
with regard to
understanding the order against it. The second was the
answer given to a proposition of this kind in
Meadow Glen Home
Owners Association & others v City of Tshwane Metropolitan
Municipality & another
2015 (2) SA 413
(SCA) para 8, namely
that:
‘
If
there were a dispute between them and the appellants regarding the
scope of the order and what needed to be done to comply with
it, it
was not appropriate for the municipality to wait until the appellants
came to court complaining of non-compliance in contempt
proceedings.
It should have taken the initiative and sought clarification from the
court.’
[22]
It follows, in my view, that Tasima’s charge of contempt had
been established against RTMC as well. The position of RTMC’s
Chief Executive Officer, Mr Msibi, against whom Tasima also sought a
committal order, is somewhat different. In the first place,
no order
of
mandamus
was directed against him personally (cf
City
of Johannesburg Metropolitan Municipality v Hlophe
[2015]
2 All SA 251
(SCA) paras 15-22). What is more, he only joined RTMC in
December 2013 and Tasima itself contended in its replying affidavit
that
Mr Msibi had ‘no personal knowledge of any facts
pertaining to Tasima’. In these circumstances I do not believe
that
the contempt charge against him was established beyond
reasonable doubt. On the other hand Tasima had made out a case
against him,
on a balance of probabilities, which is sufficient for
the interdictory relief it also sought against him.
[23]
That brings me to the related relief sought by Tasima, namely for an
order that the respondents should be interdicted from
transferring
the eNaTIS except in terms of schedule 15 to the turnkey agreement
and that the Department and its officials should
be directed, in
essence, to comply with the terms of the turnkey agreement read with
schedule 15. This relief, as I see it, was
likewise unconnected to
the outcome of the Department’s counter-application for the
setting aside of the extension of the
contract sought by Tasima on
the basis of the court orders in its favour and not on the contract
itself. The fact that the court
orders were in turn founded on the
extended contract period, does not detract from this principle. This,
I believe, also answers
the Department’s alternative argument
based on the private law principle which finds expression in the
maxim
ex
turpi causa non oritur action
(from a dishonourable cause an action does not arise)
.
According
to this argument the Department could rely on the defence in private
law that it is not bound to perform an illegal contract.
But, as I
have said, Tasima is not seeking to compel performance of a contract.
It is seeking performance of court orders in its
favour. Hence the
illegality or otherwise of the contract is of no consequence as long
as the orders stand.
The
counter-application for review
[24]
I now turn to the Department’s counter-application for the
review and setting aside of Mr Mahlalela’s decision
in May
2010, to extend the period of the turnkey contract until 30 April
2015. In support of this application the Department placed
substantial reliance on the judgment of this court in
Minister
of Transport NO & another v Prodiba (Pty) Ltd
[2015]
2 All SA 387
(SCA). In
Prodiba
a
decision by the same Mr Mahlalela in his capacity as Director-General
of the Department to extend another contract for five years,
was set
aside by this court at the behest of the Department in a
counter-application. A cardinal difference between the two cases
is,
however, introduced by the substantial delay factor in this case,
which was absent in
Prodiba
.
The impugned decision in this case, as we know, was taken in May
2010. This means that nearly five years had elapsed before the
institution of the Department’s review application. Since the
review application had been brought under s 6 of PAJA
it is, at
least on the face of it, subject to the time-bar in s 7. In
terms of this section proceedings for judicial review
in terms of s 6
must be instituted without unreasonable delay and not later than 180
days, unless the court in terms of s 9
allows an extension
‘where the interests of justice so requires’.
[25]
The Department’s first bid to circumvent the obstacle created
by the s 7 time-bar was that its counter-application
amounted to
what has become known in administrative law parlance as a collateral
or defensive challenge. Underlying this argument
is the principle
that a collateral challenge enjoys a somewhat distinct status in our
administrative law that renders it immune
to limitations of time (see
eg
Kouga Municipality v Bellingan & others
2012 (2) SA 95
(SCA) para 18;
MEC for Health, Eastern Cape & another v
Kirland Investments (Pty) Ltd
2014 (3) SA 481
(CC) para 83). The
concept of a collateral challenge has its origin in
Oudekraal
Estates (Pty) Ltd v City of Cape Town & others
2004 (6) SA
222
(SCA). According to the general principle laid down by this court
in
Oudekraal
(para 26) administrative actions must be treated
as valid until set aside, even if actually invalid. But at the same
time it recognises
the following exception to this general rule (para
32):
‘
It
is in those cases – where the subject is sought to be coerced
by a public authority into compliance with an unlawful administrative
act – that the subject may be entitled to ignore the unlawful
act with impunity and justify his conduct by raising what has
come to
be known as a “defensive” or a “collateral”
challenge to the validity of the administrative act.’
(Footnote
omitted.)
[26]
The first difficulty which confronted the Department in its reliance
on the concept of a collateral challenge was that there
are two
recent decisions of this court which held that this defence is not
available to organs of State (see
Kwa
Sani Municipality v Underberg/Himeville Community Watch Association &
another
[2015]
2 All SA 657
(SCA);
Merafong
City Local Municipality v AngloGold Ashanti Ltd
[2015]
ZASCA 85
(SCA)
.
The
Department urged us to find that these cases were wrongly decided for
two reasons. First, because they tie up the courts in
a doctrinal
straitjacket, and secondly, because they are in conflict with the
reasoning reflected in the minority judgment of the
Constitutional
Court per Zondo J (Mogoeng CJ, Jafta and Nkabinde JJ concurring) in
Head
of Department, Department of Education, Free State Province v Welkom
High School & another
2014
(2) SA 228
(CC) para 262.
[27]
I do not think that the recognition of a principle that a collateral
challenge is not available to organs of State constitutes
an
unwarranted doctrinal restriction to the courts’ review
jurisdiction. The sole reason why the Department seeks to rely
on a
collateral challenge in this case is because it wants to avoid the
consequences of the 180-day time-bar in s 7 of PAJA.
But the
time-bar in s 7 itself is not absolute. It can be extended or
condoned by the court in terms of s 9 if the interests
of
justice so dictate. The Constitutional Court’s minority
judgment in the
Welkom High School
relied upon by the
Department has, in my view, been overtaken by the later judgment by a
majority of that court in
Kirland Investments
where the
reasons for excluding organs of State from reliance on a collateral
challenge was succinctly formulated thus by Cameron
J (paras 82-83):
‘
PAJA
requires that the government respondents should have applied to set
aside the approval, by way of formal counter-application.
They must
do the same even if PAJA does not apply. To demand this of government
is not to stymie it by forcing upon it a senseless
formality. It is
to insist on due process, from which there is no reason to exempt
government. On the contrary, there is a higher
duty on the state to
respect the law, to fulfil procedural requirements and to tread
respectfully when dealing with rights. Government
is not an indigent
or bewildered litigant, adrift on a sea of litigious uncertainty, to
whom the courts must extend a procedure-circumventing
lifeline. It is
the Constitution's primary agent. It must do right, and it must do it
properly.
Counsel
for the department told this court, as he told the Supreme Court of
Appeal, that, if the department had to bring a counter-application
under PAJA, it would face the PAJA 180-day rule. Well, precisely. An
explanation for the delay is a strong reason for requiring
a
counter-application. . . .’ (Footnotes omitted.)
[28]
This brings me to the Department’s alternative contention that
the court a quo extended the 180-day period in the exercise
of its
discretion and in a manner that does not warrant intervention by a
court of appeal. On my reading of the court a quo’s
judgment I
do not believe, however, that it purported to exercise any discretion
in terms of s 9 at all. I say that because
of the following
remark in the judgment (para 99):
‘
I
therefore exercise my discretion and permit the collateral challenge
of the validity of the agreement.’
The
point is, of course, that if the court permitted the
counter-application on the basis of a collateral challenge, it would
have
no discretion to disallow that application at all (see eg
Kouga
para
18). Even if it were to be assumed that the discretion afforded by
s 9 is a discretion in the strict sense, as opposed
to a value
judgment – an assumption which is in my view open to serious
doubt – we would in any event be entitled to
intervene on the
basis that the court a quo did not exercise its discretion at all
(see eg
Oakdene
Square Properties (Pty) Ltd & others v Farm Bothasfontein
(Kyalami)(Pty) Ltd & others
2013
(4) SA 539
(SCA) paras 18-20.
[29]
In considering whether we should extend the 180-day period to five
years, it must be borne in mind that the delay rule performs
a vital
function in administrative law. Its purpose was explained as follows
by Nugent JA in
Gqwetha v Transkei Development Corporation Ltd &
others
2006 (2) SA 603
(SCA) paras 22-23:
‘
It
is important for the efficient functioning of public bodies . . .
that a challenge to the validity of their decisions by proceedings
for judicial review should be initiated without undue delay. The
rationale for that longstanding rule . . . is twofold: First,
the
failure to bring a review within a reasonable time may cause
prejudice to the respondent. Secondly, and in my view more
importantly,
there is a public interest element in the finality of
administrative decisions and the exercise of administrative functions
. .
.
Underlying
that latter aspect of the rationale is the inherent potential for
prejudice, both to the efficient functioning of the
public body and
to those who rely upon its decisions, if the validity of its
decisions remains uncertain. It is for that reason
in particular that
proof of actual prejudice to the respondent is not a precondition for
refusing to entertain review proceedings
by reason of undue delay . .
.’
[30]
Furthermore, as was explained by this court in
Opposition to Urban
Tolling Alliance & others v South African National Road Agency
Ltd & others
[2013] 4 All SA 639
(SCA) para 26, the import of
s 7 of PAJA is that after the 180-day period, a court is only
empowered to entertain the review
application if the interests of
justice require an extension under s 9. Absent such extension,
the court has no authority
to consider the review application at all.
Whether or not the decision was in fact unlawful no longer matters.
The decision would,
as it were, be ‘validated’ by the
delay. It follows that an extension of a condonation of the delay has
important consequences
and is not merely for the asking. On the
contrary, the Constitutional Court expressed itself as follows in
this regard in
Van Wyk v Unitas Hospital & another
[2007] ZACC 24
;
2008
(2) SA 472
(CC) para 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.’
[31]
In this case it is clear that the Department became aware of the
alleged grounds of invalidity of the 2010 extension shortly
after
Mahlalela’s impugned decision to that effect had been taken.
Since then the Department had been advised by the State
Attorney and
various counsel, senior and junior, on numerous occasions about the
legal basis on which the decision could be challenged.
It sought to
explain away the delay by stating that, although Mr Letsoalo wished
to challenge the extension, Mr Mahlalela stood
in his way of doing
so. But it appears that Mr Mahlalela was the deponent to the
Department’s answering affidavit where he
expressly challenged
the validity of his own decision to extend the contract period before
Mabuse J and that he did the same in
the subsequent petition to this
court. It therefore cannot be credible that, simultaneously with
challenging the extension, Mr
Mr Mahlalela was taking steps to
prevent that same challenge. Moreover, Mr Mahlalela’s contract
as Director-General expired
on 28 February 2013. After this date
there was therefore no impediment to the institution of review
proceedings. What is more,
in
Prodiba
the
Department brought a counter-application for review in circumstances
substantially similar to those of this case. There is therefore
no
explanation whatsoever for the additional two year delay since 2013
before the counter-application was brought in March 2015.
This is in
stark contrast with the requirement formulated in
Unitas
Hospital
that
the explanation must cover the entire period of delay.
[32]
A separate contention raised by the Department as to why the five
year delay should be condoned, rested on allegations of fraud
and
corruption. The factual basis relied upon for this contention, was
this: After Mr Mahlalela vacated his position as Director-General
in
February 2013, so Mr Letsoalo testified, he immediately opened a
criminal charge against him. Mr Letsoalo also appointed a forensic
firm to investigate the extension of the contract and reported the
matter to the Special Investigation Unit (the SIU) established
in
terms of the Special Investigation Units and Special Tribunals Act 74
of 1996.
[33]
An affidavit on behalf of the SIU records its finding that an entity,
Brand Partners (Pty) Ltd, in which one Mr Ncube was a
director,
entered into a consultancy agreement with Tasima to provide
consultancy services relating to eNaTIS for a monthly fee
of
R2 million, irrespective of whether any services were performed
or not. The contract between Brand Partners and Tasima
had as one of
its conditions precedent that the eNaTIS contract be extended for a
period in excess of 18 months before 30 June
2013. Mahlalela went on
to extend the contract on 12 May 2010 (ie before 30 June 2013).
Subsequently Mahlalela signed a residential
lease agreement to lease
the house owned by Mr Ncube of Brand Partners. The rental was stated
to have been R45 000 per month.
But he did not pay any deposit
nor did he pay any rental between 1 November 2010 and 30 November
2011.
[34]
As appears from the formulation of the Department’s review
grounds to which I have referred earlier, fraud was never
one of
them. On the contrary, these grounds were confined to Mahlalela’s
failure to apply a competitive bidding process as
required by s 217
of the Constitution, the PFMA and other statutory
enactments.
The allegations of fraud and corruption were advanced in the
Department’s answering affidavit, not under the heading
‘the
illegality of the extension’ but under the rubric ‘the
delay in reviewing Mahlalela’s decision’.
In this context
of explaining the delay, these allegations of fraud and corruption
were put forward in support of the thesis that
it was Mahlalela who
stymied any challenge to the unlawful extension at an earlier stage.
[35]
When this was raised with the Department’s counsel in argument,
the response was that this court should not be deterred
from
considering serious allegations of fraud merely because they were
advanced under the ‘wrong heading’. As I see
it, however,
the response is over-simplistic. Tasima did not respond to these
allegations of fraud and corruption at all. It contested
the
proposition that Mahlalela was to blame for the Department’s
inaction in another way, namely, by pointing out that Mahlalela
deposed to the Department’s opposing affidavit in the
application before Mabuse J; that he also deposed to the affidavit
supporting the application for leave to appeal to this court; and
that, in any event, he ceased to be the Director-General in February
2013. In these circumstances Tasima’s failure to deal with the
allegations of fraud and corruption does not justify the inference
that it is unable to do so, nor can it be regarded as an implied
admission that these allegations are true. To elevate these
allegations
to a level where they are deployed as an independent (and
in fact sole) reason for extending the 180-day time limit would
severely
prejudice Tasima.
[36]
Furthermore, the Department’s contention that a 180-day time
limit must be extended on the basis of allegations of fraud,
even
though these allegations may not be relied upon as a basis for
setting the impugned decision aside, defies logic. Why would
the
review door be opened to the Department on the basis of fraud which
would then become irrelevant in the review itself because
the
Department does not rely upon it as a review ground? It also begs the
obvious question: why is the Department so reluctant
to rely on these
allegations as a basis to challenge the impugned decision? The only
reason I can think of is that the Department
has little, if any,
confidence in its ability to establish these allegations if they were
to be properly challenged in a court
of law.
[37]
Conversely, if the Department wants to rely on fraud to set the
impugned decisions aside, why has it not yet done so? Mr Letsoalo
must have been aware of the allegations since at least 2013,
otherwise he could hardly have substantiated criminal charges against
Mr Mahlalela, nor could he be able to justify the appointment of a
forensic firm or make a report to the SIU at that stage. If
this is
so, why did he not raise these allegations in answer to the five
contempt applications that Tasima has brought since then?
Why did the
Department allow the contract to run for another two years with the
possibility of a further extension under schedule
15? Why did it not
simply cancel the turnkey agreement and apply for the setting aside
of the Mabuse J order on the basis of fraud?
Simply stated, I do not
believe we would be justified to extend the 180-day time limit on the
basis of allegations of fraud which
(a) may play no further part in
the review proceedings and (b) had been known to the Department for
more than two years prior to
the application. After all, if the
Department believes that it is in a position to establish the serious
allegations of fraud and
corruption obliquely referred to, there
would be nothing preventing it to cancel the turnkey agreement and to
seek the setting
aside of the Mabuse J order on that basis at any
time in the future. Questions of
res
iudicata
do
not arise, because the allegations of fraud and corruption have never
been pleaded as a cause of action nor decided upon.
[38]
The Department’s final argument was that the closure of the
review door on its case would result in an unlawful contract,
which
might have been induced by fraud, being extended for another five
years. But, as I see it, there is more than one answer
to this
argument. First, if the Department had failed to make out a case for
extension of the 180-day limitation, as in my view
it did, the
extension became ‘validated’ through delay. Whether or
not it was in fact unlawful no longer matters. Secondly,
the fact
that it may have resulted from fraud, is not part of the Department’s
cause of action. If the Department wants to
rely on that cause of
action, there is nothing that prevents it from doing so. Thirdly,
there is no reason why the transfer of
the eNaTIS under schedule 15
should take 5 years. On the Department’s own version it should
take no more than 12 months and
may even be completed in four months.
[39]
For these reasons I believe that there is no basis for extending the
180-day time limit imposed by s 7(1) of PAJA and
that the court
a quo was therefore precluded from entertaining the
counter-application to review and set the impugned extension
decision
aside. It follows that, in my view, the appeal against both the
dismissal of the main application and the order upholding
the
counter-application, must succeed with costs.
[40]
It is ordered that:
(a)
The appeal against both the dismissal of the main application and the
order granted in terms of the counter-application is upheld
with
costs, including the costs of two counsel, against the first and
fifth respondents, jointly and severally.
(b)
The order of the court a quo is set aside and replaced with the
following:
‘
An
order is issued in the following terms:
1.
Declaring:
(a)
the first and second respondents to be in breach and contempt of:
(i)
paragraph 1.1 of the order of this court issued under case number
44095/2012, handed down by Mabuse
J on 17 October 2012 (the Mabuse
Order);
(ii) paragraph
3 of the order of this court issued under case number 44095/2012
handed down by Strijdom
AJ on 26 March 2013 (the Strijdom Order);
(iii) paragraphs 5
and 6 of the order of this court issued under case number 44095/2012
handed down by Fabricius
J on 27 August 2013 (the Fabricius Order);
(iv) paragraph 1 of
the order of this court issued under case number 44095/2012 handed
down by Rabie J on 21 January
2014 (the Rabie Order);
(b) the fifth
and eleventh respondents to be in breach and contempt of:
(i)
paragraphs 5 and 6 of the Fabricius Order; and
(c) the tenth
respondent to be in breach and contempt of:
(i)
paragraph 1.1 of the Mabuse Order;
(ii) paragraph
3 of the Strijdom Order;
(iii) paragraphs 5
and 6 of the Fabricius Order;
(iv) paragraph 4.1
of the order of this court issued under case number 44095/2012 handed
down by Nkosi J on 5
November 2013 (the Nkosi Order);
(v) paragraph
1 of the Rabie Order;
2.
Ordering that:
(a)
no transfer of the eNaTIS and the services (as defined in the turnkey
agreement for the provision of
the eNaTIS system (Contract RT1194KA)
dated 3 December 2001, as subsequently amended and extended ( the
turnkey agreement) may
take place except in terms of the transfer
management plan envisaged in schedule 15 to the turnkey agreement;
(b)
for the duration of the transfer of the eNaTIS and the services:
(i) the
applicant is to be paid, by the first respondent, for all services
rendered under the agreement,
in accordance with, inter alia, the
terms of the turnkey agreement and paragraph 1.2 of the Mabuse Order;
(ii) all
purchase requisition orders are to be processed in accordance with,
inter alia, the terms of the
turnkey agreement and paragraph 4 of the
Nkosi Order; and
(iii) all material
contracts and agreements required to be approved by the first
respondent will be so approved
within five days of the request by the
applicant;
(c)
the first, second, fifth, tenth and eleventh respondents are
interdicted from taking any steps to implement
the purported transfer
alluded to in the letters dated 24 February 2015, 25 February 2015
and 4 March 2015 (the transfer correspondence,
which respectively
comprise annexes FM27, FM25, and FM28 to the supporting affidavit of
Fannie Lynen Mahlangu dated 12 March 2015),
or to implement any
transfer of the eNaTIS, the services (as defined in the turnkey
agreement) or any related services contrary
to 2.1 above;
(d)
the fifth respondent is to desist from advertising for any eNaTIS
related positions until at least a
transfer management plan has been
finalised in terms of the turnkey agreement;
3.
Ordering that:
(a)
the second and tenth respondents be committed to imprisonment for a
period of 30 days.
(b)
the order in paragraph 3(a) above will not come into operations
unless there is a breach of the order
in paragraph 2(c) above;
(c)
a warrant of committal is to be issued by this
court on the same papers, duly supplemented as necessary,
if the
first, second and tenth respondents breach the order in paragraph
2(c) above;
4.
Ordering the first and fifth respondents, jointly and severally, to
pay the applicant’s
costs of the application dated 12 March
2015, including the costs of two counsel.
5(a)
Dismissing the first respondent’s counter-application dated 26
March 2015;
(b)
Ordering the first respondent to pay the applicant’s costs of
the counter-
application, including the costs of two counsel.
______________________
F
D J BRAND
JUDGE
OF APPEAL
APPEARANCES:
For
the Appellant:
A E Franklin SC, J P V McNally SC, A W T Rowan
Instructed by:
Weber Wentzel
Johannesburg
c/o Symington & De Kok,
Bloemfontein
For
the first, second, third,
sixth
and tenth Respondent:
D Unterhalter SC, M du Plessis, J A Motepe
Instructed by:
State Attorney, Pretoria
c/o State Attorney, Bloemfontein
For
the fifth and eleventh
Respondent:
G J Marcus SC, F B Pelser, L N Luthuli
Instructed by:
Seleke Attorneys, Johannesburg
c/o Bezuidenhouts Inc, Bloemfontein