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[2020] ZAGPJHC 425
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South African Broadcasting Corporation SOC Limited and Another v Mott Macdonald SA (Pty) Ltd (29070/18) [2020] ZAGPJHC 425 (8 December 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
29070/18
REPORTABLE:
YES
OF
INTEREST TO OTHER JUDGES: YES
REVISED.
DATE
8/12/2020
In
the matter between:
SOUTH
AFRICAN BROADCASTING
Applicant
CORPORATION
SOC LIMITED
SPECIAL
INVESTIGATING
UNIT
Second Applicant
And
MOTT
MACDONALD SA (PTY) LTD
Respondent
J
U D G M E N T
Judicial
review – Procurement contract - self review by SABC coupled
with review by another organ of state (Special Investigating
Unit) –
whether SIU bound to apply for review under PAJA, or whether legality
review competent – Constitutional
Court judgment in
State
Information Technology Agency
SOC
Ltd v Gijima Holdings (Pty) Ltd
discussed
and applied -
Held: legality review,
and not PAJA review, by SIU competent –- Delay in instituting
review – whether reasonable –
Held: not reasonable but
appropriate in circumstances to overlook unreasonable delay –
Contract concluded in breach of procurement
requirements – no
evidence of corruption – contractor delivered services -
question of just and equitable remedy under
s 172(1)(b) of
Constitution – Held: contractor to retain only reasonable
expenditure, not profit.
KEIGHTLEY,
J
:
INTRODUCTION
1.
Our courts are no strangers to litigation
involving organs of state seeking to review their own previous
decisions. This matter
is another example of the phenomenon.
The application was brought in a particular context. The state
organ concerned
is the South African Broadcasting Corporation SOC
Limited (the SABC). It is co
mmon
knowledge that it has had a troubled
governance history, particularly in the era of the previous Chief
Operations Officer, Mr. Motsoeneng.
It applies to review and
set aside one of a number of procurement contracts entered into in
that era, and earmarked for investigation
by the second applicant,
the Special Investigating Unit (the SIU). The contract
concerned was a consultancy contract awarded
to the respondent, Mott
MacDonald Africa (Pty) Ltd (Mott), in July 2015.
2.
The
consultancy contract is not tainted by any evidence of corruption or
similar conduct. One of the questions that arises
is that of a
just and equitable remedy under s 172(1)(b) of the Constitution in
circumstances where the contractor has delivered
services, and has
been paid for them, but faces the prospect of the original contract
being reviewed and set aside. Another
is the question of delay
on the part of the applicants in instituting the review, and whether
this should non-suit them.
A third issue is on what basis the
SIU ought to have instituted its application for review. It was
granted leave to intervene
in the proceedings and launched its own,
albeit joint, review application. Like the SABC, it based its
review on the constitutional
principle of legality, rather than on
the Promotion of Administrative Justice Act
[1]
(PAJA).
The question is whether it ought properly to have sought a review
under that Act.
3.
The
SABC is a state-owned company. As a public entity under s 1
read with Schedule 2 of the Public Finance Management Act
[2]
(the
PFMA) it is required to discharge its duties in terms of the
applicable laws relating to the procurement of goods and services.
In part, the PFMA gives effect to s 217 of the Constitution which
requires that public entities must contract for goods and services
in
a manner that is fair, equitable, transparent, competitive and
cost-effective. The hallmark of this constitutional imperative
is the open-bidding process.
4.
This review is sought on the basis that the
SABC awarded the contract without following any of its prescribed
procurement policy
processes. It did not award the contract on
an open-bidding basis. Instead, it treated
Mott
as a sole provider of services contrary to the
regulatory rules of the procurement scheme. In so doing, the
applicants say,
the SABC’s conduct, and the resulting
consulting contract, fell foul of s 217 of the Constitution. As
such, the contract
must be reviewed, declared void
ab
initio
and set aside. The
applicants ask in addition that the court exercise its discretion
under s 172(1)(b) of the Constitution
and grant a remedial order
which is just and equitable.
5.
Section 172 prescribes what the powers of
courts are in constitutional matters. It provides that:
“
(1)
When deciding a constitutional matter within its power, a court-
(a)
must
declare
that any law or conduct that is inconsistent with the Constitution is
invalid to the extent of its inconsistency; and
(b)
may make any order that is just an equitable
, including-
(i)
an order limiting the retrospective effect
if the declaration of invalidity; and
(ii)
an order suspending the declaration of invalidity for any period or
on any conditions,
to allow the competent authority to correct the
defect.” (emphasis added)
6.
The
essence of the application is that it is a self-review, brought by
the SABC to set aside its own contract. The SIU joins
the
proceedings acting under its statutory mandate. In terms of s
4(1)(c) of the Special Investigating Unit and Special Tribunal
Act
[3]
(the
SIU Act) it has the power to institute civil proceedings on behalf of
State institutions where justifiable civil disputes exist.
[4]
In
this case, the SIU was given specific powers under Presidential
Proclamation R29 of 2017, dated 1 September 2017, to investigate
and
take action in respect of contracts entered into by the SABC with
various parties. The contract entered into between
the SABC and
Mott
was
one of those contracts referred to in the Proclamation. The SIU
was further mandated in the Proclamation to recover “any
losses
suffered by the SABC or the State” in relation to the contracts
in question.
7.
The SABC instituted its review application
on 7 August 2018. The SIU instituted an application to
intervene as second respondent
in May 2019. The application was
granted, despite
Mott
’
s
opposition, on 26 February 2020. As I have indicated, the SIU
joins hands with the SABC in terms of the facts and averments
relied
upon to support the review, albeit that they seek a slightly
different s172(1)(b) remedy.
8.
Mott’s stance is that the period of
delay for both parties was unreasonable and that the court ought not
to consider the application
for that reasons alone. The
applicants take a different view on the question of delay. It
is one of the key issues
of contention between the parties.
9.
In contrast to the issue of delay, there is
no real dispute between the parties on the question of whether the
contract was irregularly
awarded. Mott does not concede this
point, but it does not contend otherwise. It says that it has
no knowledge of the
internal regulatory rules governing procurement
within the SABC, and it offers no comment in this regard. It
follows that
while I must of course be satisfied that the applicants
make out a case for the irregularity of the contract, this
determination
must be made on their version alone.
10.
The final key issue of contention between
the parties is that of a suitable remedy under s172 (1)(a) of the
Constitution, in the
event that I find that the contract was
irregularly awarded. The applicants want the court to declare
it invalid
ab initio
,
to set it aside in total, and to fashion a remedy that will ensure
that
Mott
must
disgorge any profit it made under the contract.
Mott
,
on the other hand, submits that justice and equity require that it
ought not to be deprived of its rights under the contract as
it was
an innocent contractor, which delivered value under the contract even
if the contract was irregularly awarded.
11.
This
is not the first case in which these key issues of contention have
arisen for determination in the courts. In recent
years,
applications for self-review by organs of state have been dealt with
in a number of cases and have resulted in judgments
by higher courts,
including judgments by the Constitutional Court. Indeed,
earlier this year, a Full Court of this Division
handed down an
appeal judgment involving an application by the SABC for
self-review. The SABC was also joined there by the
SIU as its
co-applicant. In the resultant judgment, viz.
SIU
& SABC v Vision View Productions CC
[5]
(
Vision
View
),
the court had to consider some of the same issues that arise in this
case. Thus, I am in the fortunate position that the
relevant
principles have been laid down in these earlier judgments. What
remains, of course, will be to consider the application
of those
principles to the particular circumstances of the case before me.
12.
I propose to undertake this exercise by
considering the issues under the following heads:
12.1.
The proper legal basis for the SIU’s
application.
12.2.
The background to the awarding of the
contract and the issue of irregularity.
12.3.
The question of delay on the part of the
applicants.
12.4.
If the applicants are not non-suited on the
basis of delay, the issue of review and an appropriate remedy under s
172(1)(a).
THE PROPER LEGAL BASIS
FOR THE SIU’S APPLICATION
13.
Both
parties base their review on the principle of legality, rather than
on PAJA. Insofar as the SABC is concerned, there
can be no
question that this is the correct basis of review. This was
laid to rest by the Constitutional Court in
State
Information Technology Agency
SOC
Ltd v Gijima Holdings (Pty) Ltd
[6]
(
Gijima
)
in which it was held that an application for self-review by an
organ of State must be brought under the constitutional principle
of
legality and not under PAJA.
14.
As to the SIU, the respondent contends that
as it is not seeking a review of its own decision, it is bound to
proceed under PAJA,
rather than on the basis of legality.
Further, Mott says that the SIU did not institute its review within
the 180-day time
period prescribed under PAJA. As it has based
its review on legality, the SIU did not apply for an extension of
this period
in its notice of motion, nor did it address the issue in
its affidavits.
Mott
says
that this is fatal to the SIU’s case.
15.
The
SIU takes a different view, contending that it was bound to institute
a legality review, rather than a PAJA review. Both
parties rely
on
Gijima
to support their opposing contentions. In addition,
Mott
relies
on
Hunter
v Financial Sector Conduct Authority and Others
,
[7]
in
which the Constitutional Court, relying on its judgment in
Gijima
stated that:
“
As
a general rule, PAJA must therefore apply unless the review is
brought by a public functionary in respect of its own unlawful
decision.”
[8]
16.
It is on the basis of this dictum in
particular that
Mott
says
that as the SIU was not seeking a self-review of its own unlawful
decision, under the general rule pronounced by the Constitutional
Court, it was obliged to institute its review under PAJA.
17.
I have reservations about
Mott
’
s
reliance on the so-called general rule espoused in
Hunter
.
In the first place, the facts in that case were materially different
from those arising here. In
Hunter
,
the applicant had
not
applied for a review of the impugned decision by the FSCA. She
wanted an order directing the FSCA to conduct further investigations
into various issues, and for the court to supervise compliance with
the order. It was in this context that the Court considered
whether PAJA applied. It found that it did and that the
applicant ought to have applied to review and set aside the decisions
to which she had directed her complaints. In other words, in
Hunter
,
the Court was not concerned with the question of which legal basis
for review was applicable. It was concerned with the
question
of whether the applicant ought properly to have instituted review
proceedings as her cause of action in the first place.
The
dictum relied on by
Mott
must
be read in that context.
18.
In the second place, in
Hunter
the applicant was a private person, and not a state entity.
That PAJA ordinarily applies to a review in those circumstances
is
trite. The Court in Hunter was not concerned with a situation
in which another state entity, albeit one who did not make
the
impugned decision, is seeking a review. It is this situation
with which our case is concerned. The dictum in
Hunter
does not assist in this regard.
19.
Finally, however,
Mott
’
s
contentions are not based on a proper reading of
Gijima
.
I know that
Gijima
was a case dealing only with self-review. The only party
wanting to review the impugned decision was the decision-maker
itself. In our case we have a hybrid situation: the
decision-maker wishes to review its own decision, but so does another
state entity. This is not entirely on all-fours with the
situation pertaining in
Gijima
.
20.
However, in making pronouncements on the
general principles applicable, the Court in
Gijima
did not confine itself to cases of self-review. It commenced
its inquiry on whether PAJA was applicable in cases of self-review
by
considering that Act’s constitutional underpinnings. It
situated PAJA within the context of s 33 of the Constitution
which
guarantees that: “
Everyone has the
right to administrative action that is lawful, reasonable and
procedurally fair.
” The
Court considered the following question and provided the following
answer:
“
Is
‘everyone’ in this section so wide as to extend to the
State? We think not. Section 33(3)(b) provides
that
national legislation, which - in terms of section 33(3) - has to give
effect to the section 33 rights, must impose a duty
on
the state
to
give effect to the rights in section 33(1) and 33(2). It seems
inconsonant that the State can be both the beneficiary of
the rights
and the bearer of the corresponding obligation the is intended to
give effect to the right. This must, indeed,
be an
indication that only private persons enjoy rights under section
33.”
[9]
(emphasis
in the original)
21.
The Court concluded that:
“
In
the end, we are fortified in the conclusion
that
section 33 of the Constitution creates rights enjoyed only by private
persons
.
And the bearer of obligations under the section is the State.”
[10]
(emphasis
added)
22.
While the Court did not apply its mind
specifically to the situation that presents itself in this case, it
clearly stated that the
right to review under section 33, and hence
PAJA, is a right enjoyed by private persons and not state entities.
Extrapolating
from this fundamental principle, it seems to me that
the logical end-point must be that PAJA is not an instrument of
review open
to be used by state entities. This must be so even
if they are not seeking a review of their own decision.
23.
As
the Constitutional Court noted in its later decision in
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Ltd
[11]
(
Buffalo
City
),
its approach in
Gijima
has
been the subject of criticism. However, that approach and the
dicta cited above have not yet been overruled by that Court,
and it
remains the applicable law. Thus, a proper reading of
Gijima
demonstrates that there is no merit in
Mott
’
s
contention that the SIU ought to have instituted its review under
PAJA.
24.
There is another reason to reject
Mott
’
s
submission. The SIU has the power under s 4(1)(c)(i) to
institute civil proceedings in any court of law for any relief that
the SABC (in this case) is entitled. The SIU submitted that
what this means is that it has “
stepped
into the shoes
” of the SABC in
seeking a review. Consequently, because it is not seeking a
review on its own behalf, but instead on
behalf of, and in
conjunction with, the SABC, it is bound to follow the same path of
review as the SABC, viz. legality review.
25.
In addition to the clear dicta in
Gijima
to the effect that state entities do not have a right of review under
PAJA, where a state entity like the SIU acts under a statutory
mandate to institute a review on behalf of another state entity, like
the SABC, it seems to me to be logical that it should follow
the same
path of review.
26.
For all of these reasons, I am satisfied
that in this case the SIU acted properly in instituting its review
based on legality, and
not on PAJA.
THE AWARD OF THE
CONTRACT AND THE ISSUE OF IRREGULARITY
27.
The relevant background facts are largely
common cause. In 2014 the SABC went through a tender process
for the refurbishment
of lifts and escalators at its Aukland Park
offices, and for the instalment of an additional two lifts. The
record of that
tender process does not form part of the review
record, however, it seems that on about 11 December the Technology
Investment Committee
endorsed a business case presented for
additional budget for the project.
28.
On the same day, the Group Exco of the SABC
met. Mr Herold, a General Manager - Radio Broadcast Resources,
made a presentation
regarding the status of the lifts. The Head
of Procurement at that stage, Mr Shushu told the meeting that the Bid
Evaluation
Committee had recommended that Schindler be awarded the
tender. This provoked concerns from Mr Motsoeneng, the Chief
Operating
Officer of the SABC and Mr Aguma, the Chief Financial
Officer. They expressed the view that the procurement process
should
be open to all suppliers. Disquiet was sounded about
Schindler’s “
appalling
service
”. There were also
allegations that the tender process in terms of which Schindler had
been appointed had been flawed,
as information allegedly had been
leaked.
29.
After these interventions by Mr Motsoeneng
and Mr Aguma, the Group Exco resolved, among other things, that:
29.1.
The existing tender in terms of which
Schindler was recommended to be awarded the lifts tender was
cancelled.
29.2.
An independent Consulting Engineer be
appointed to advise on “
the entire
elevator matter
”.
29.3.
A forensic investigation into the existing
elevator tender was to be instituted.
29.4.
The Procurement Division was granted
permission to issue a closed tender in respect of elevator
maintenance and acquisition.
29.5.
The closed tender process was to
involve three companies, but Schindler was to be excluded.
30.
At a later Group Exco meeting on 25 and 26
March 2014, the 11 December resolution was rescinded. Instead,
the meeting resolved
that the CFO, Mr Aguma, be “
required
to undertake full accountability for the lift tender and maintenance
matters
”. In this regard,
he and the GE: Risk and Governance were required “
to
ensure that the lift tender matter follows strict governance
processes
”.
31.
On 15 April 2015 Mr Aguma wrote to one
Ronald Athiyo, an engineer at Mott MacDonald, under cover of an
email. The letter said:
“
SABC
LIFTS
The above subject refers.
This letter serves to
request a meeting with regard to SABC lifts. The SABC has
approximately 36 lifts and 6 escalators that
need
replacement/refurbishment at both Auckland Park’s Radio Park
and TV Block buildings.
I would therefore like to
discuss the capabilities of your company in sourcing suppliers to
offer services for this exercise.
To that end, my office will
like to set up a meeting with you at your earliest convenience.
Please advise on your
availability.”
32.
Mr Athiyo circulated the letter to some of
his colleagues at
Mott
by
way of an email saying:
“
Paulo/Ali
Please see attached
below. This has come through a contact of mine who used to wrk
at DBSA. I am told SABC would like
help with;
•
development
of specs
•
tender
documents
•
procurement
process
•
supervision
of works
Anyone available to
attend this meeting so that I can go back to them with a
confirmation?”
33.
The next event to occur was a meeting
between Mr Aguma and Mr Monapathi, a Project Manager at
Mott
,
to discuss what was required of
Mott
,
its company profile and its capabilities. Thereafter, on 8 June
2015,
Mott
presented
its proposal to Mr Aguma and some members of Exco.
Mott
contends that it was impressed upon its
representatives at this meeting that the project was urgent, as the
lift situation was unsafe.
There is some dispute between the
parties as to whether the project was indeed urgent. In my
view, nothing of substance turns
on this and it is not necessary to
engage in this debate. I record only my view that despite any
utterances that may have
been made by SABC personnel that the lift
project was urgent, the project does not seem to have been so urgent
as to warrant ignoring
established procurement protocols.
34.
The proposal outlined that the SABC wished
to procure its professional services for rendering mechanical,
electrical and structural
services for purposes of designing and
managing the implementation of a lift replacement project at Auckland
Park.
Mott
’
s
involvement would be to provide all services necessary to recommend
and appoint a contractor to carry out the work. This
would
include the preparation of budget estimates, tender documentation,
drawings, the recommendation of a contractor for the SABC
to
consider, site supervision, implementation, commissioning and
handover. In other words,
Mott
’
s
role would be to do all the work preparatory to identifying a
contractor through a tender process to be run by
Mott
.
The contractor would be identified for approval by the SABC.
Mott
would
continue to play a role thereafter in overseeing the implementation
of the lift contract, and it’s close out.
35.
On
12 June 2014 the Divisional Director of
Mott
,
Mr Ramsarup, submitted a written proposal to Mr Aguma regarding the
scope of work in detail (the written proposal). The
written
proposal recorded that it was presented in response to a Request for
Proposal (RFP) from the SABC.
[12]
It
identified the stages of the consulting services that
Mott
would
provide. These included:
35.1.
Stage 1 - Inception;
35.2.
Stage 2 - Concept and Viability;
35.3.
Stage 3 - Design Development;
35.4.
Stage 4 - Documentation and Procurement
(including the preparation of procurement documentation;
implementation of procurement procedures;
and completion of tender
evaluation and recommendation for appointment of contractor);
35.5.
Stage 5 - Contract Administration and
Inspection; and
35.6.
Stage 6 - Close out.
36.
The proposed cost was based on a percentage
of the final lift replacement contract to be undertaken by the
contractor identified
by
Mott
.
The estimated capital cost of the lift replacement project was R97
678 million.
Mott
proposed
that its fee as consultant would be 7.2% of the capital cost,
amounting to R7 033 464. 00 in total, broken down according
to
payments to be made at the conclusion of each stage.
37.
Accompanying the written proposal was a
covering letter which made provision for Mr Aguma to accept the
written proposal by appending
his signature. The covering
letter indicated that the written proposal and
Mott
’
s
standard terms and conditions (attached to the written proposal as
Annexure B) would serve as the basis of the agreement on acceptance
by Mr Aguma. Mr Aguma appended his signature to the covering
letter, indicating the SABC’s acceptance of the agreement
on 6
July 2015.
38.
It is common cause that
Mott
rendered services under the consulting contract to
the SABC in respect of stages 1 to 4. However, after
Mott
had gone through the envisaged tender process, and
had identified a recommended contractor to the SABC, the SABC took
the decision
not to go forward with the lift replacement project.
Thus, stages 5 and 6 fell by the wayside.
39.
It is also common cause that various
payments were made to
Mott
under
the contract between 30 September 2015 to 19 August 2016.
Mott
says that it
was paid some R4.9 million in total. The applicants do not
dispute
Mott
’
s
contention that the fees
Mott
charged were in line with gazetted fees for the
consultancy work that it did.
40.
Why do the applicants say that the contract
was awarded irregularly and that it is unlawful? An initial,
and important point
to make, is that the applicants do not contend
that
Mott
was
involved in any form of corruption, or similar unethical practices in
the awarding of the contract to it. There is no
evidence of
this, and the applicants make no such assertion. They accept
that the blame for what went wrong falls primarily
at the doorstep of
Mr Aguma, in particular. However, for reasons that will become
apparent later, the applicants also do
not concede that
Mott
was a completely innocent contracting party.
This is an issue that pertains particularly to the remedial portion
of
the case, and I will deal with it later.
41.
The applicants’ case regarding the
irregularity and illegality of the contract is that it was awarded
without any compliance
whatsoever with the procurement obligations of
the SABC. As such, in concluding the contract they say that the
SABC breached
its constitutional obligation under s217, and thus the
legality principle.
42.
Section
38(1)(a)(iii) of the PFMA requires the SABC, as a public entity, to
implement an “
appropriate
procurement and provisioning system which is fair, equitable,
transparent, competitive and cost-effective
”.
The SABC is also subject to the provisions of the Preferential
Procurement Policy Framework Act
[13]
(the
PPFA), and the Treasury Regulations for Departments, Trading Entities
Constitutional Institutions and Public Entities
[14]
(the
Treasury Regulations).
43.
National
Treasury Note 8 of 2007/2008 (the Treasury Note) regulates the
threshold values within which public entities may procure
goods or
services through various means. It provides that for
transactions above the value of R500 000. 00, invitations for
competitive bids must be advertised.
[15]
A
deviation from this requirement is permissible in certain
circumstances:
“
Should
it be impractical to invite competitive bids for specific
procurement, e.g. in urgent or emergency cases or in case of a
sole
supplier, the accounting officer/authority may procure the required
goods or services by other means, such as price quotations
or
negotiations in accordance with Treasury Regulation 16A6.4. The
reasons for deviating from inviting competitive bids should
be
recorded and approved by the accounting officer/authority or his/her
delegate. Accounting officers/authorities are required
to
report within ten (10) working days to the relevant treasury and the
Auditor-General all cases where goods and services above
the value of
R1 million (BAT inclusive) were procured in terms of Treasury
Regulation 16A6.4. The report must include the
description of
the goods or services, the name/s of the supplier/s, the amount/s
involved and the reasons for dispensing with the
prescribed
competitive bidding process.”
[16]
44.
In addition to these general legislative
prescripts, the SABC is bound by its own Supply Chain Management
Policy (the SCM policy).
This policy permits a deviation from
the competitive bidding process in limited circumstances. It
provides, in relevant part:
“
13.19.1
The SABC shall use limited bidding only in the following exceptional
circumstances, in case of urgency where unforeseen early delivery and
urgent business continuity is of critical importance and
the standard
procurement process is impossible or impractical.
13.19.2
Urgent cases are cases where early delivery is of critical importance
and the invitation of competitive bids is either impossible or
impractical however does not include cases where planning was not
done in time.
…
13.19.5
Single source bidding where after a thorough analysis there is
good
and justifiable reason to restrict the process to only one bidder
such as where you enter into a maintenance contract with
only the
bidder who supplied the product otherwise the product loses its
guarantee (
sic
).
13.19.6
Sole source bidding where no competition exists and it is proven
that
only one bidder exists.
13.19.7
The deviations may only be approved by the appropriate authority
as
per the Delegation of Authority Framework (‘DAF’).
13.19.8
The BAC must sign off deviations from normal procurement processes
depending not the threshold and recommend to the Group EXCO
deviations that are above their level of authority as per DAF.
…
.
”
45.
The
SCM policy provides further that an open-bidding process, initiated
by a Request for Proposals (RFP), must be followed for all
requirements above R2 million.
[17]
46.
Direct
negotiations with potential suppliers is also regulated under the SCM
policy. These are permitted: “
only
… after approvals as per DAF and shall be conducted in such a
manner that none of the suppliers is advantaged or prejudiced
”.
[18]
The
Group Chief Executive Officer or delegate: “
..
May negotiate the contract only with the preferred bidder identified
by means of the competitive bidding process
”.
47.
Both the SABC and the SIU conducted
forensic investigations into the various impugned contracts
identified in the 2017 Proclamation,
including the consulting
contract with
Mott
.
These investigations found that there was no competitive bidding
process leading up to Mr Aguma entering into the contract
with
Mott
.
This finding is supported on the evidence before me. The
evidence shows quite clearly that Mr Aguma approached
Mott
of his own accord by way of the letter emailed on
15 April 2015 to Mr Athiya. This led directly to the
consultancy contract
that was signed on 6 July 2015. No other
service provider featured at all, and none was considered, alongside
Mott, as a
potential candidate to be awarded the consulting contract.
48.
From at least 12 June 2015, when the
written proposal was sent to Mr Aguma, he would have known that the
proposed consultancy fees
were above the R2 million limit requiring
an open-bidding process before the services of
Mott
could be contracted for lawfully. He had
been specifically required under the resolution adopted at the 11
December 2014 Group
Exco meeting to take full accountability for the
lift tender. Together with the General Executive (GE): Risk
Governance,
he was also required under the resolution “
to
ensure that the lift tender follows strict governance processes
”.
While Mr Aguma proposed at the meeting that an independent, external
company be engaged to undertake the procurement
process for the lift
tender, the meeting did not resolve that he be permitted to deviate
from the SCM policy processes in order
to secure those services.
49.
The SABC internal report details that, at
the request of the SABC Legal Services department, Ms Mbanjwa, a
project manager in the
SABC’s Engineering Services department,
requested Mr Aguma’s office to provide her with the necessary
deviation document
signed by the relevant parties. She did not
receive any documents in response to her request, and she was
subsequently removed
from the lift and escalators project. The
Rule 53 record does not include any documents showing that Mr Aguma
obtained the
necessary authority under the SCM policy to deviate from
the rule requiring an open-bidding process for the procurement of
services
over the value of R2 million.
50.
In terms of the DAF, approvals for
deviations from tender procedures had to follow a particular path.
The relevant operational
manager was the first official who had to
recommend the deviation. The deviation should then also have
been recommended by
the Bid Evaluation Committee and the Bid
Adjudication Committee before being elevated to Exco. Until 25
June 2015, for deviations
of up to R50 million, the Bid Adjudication
Committee could give its approval. This was amended as from 25
June 2015.
From that date, the Group CEO, the COO or the CFO
could approve deviations for amounts of put to R10 million.
However, other
than this the process remained generally the same.
The deviation first had to be recommended by the authorities referred
to earlier, and, importantly, any request for a deviation had to be
supported by a sound motivation.
51.
Had Mr Aguma acted in accordance with the
deviation process, it is unthinkable that the relevant documents
would not have been filed
for safe keeping. ihus, If they had
ever existed, they should have been accessible for inclusion in the
Rule 53 record.
The Head of Procurement at the time, Mr Shushu,
told the SIU in an affidavit that there was no audit trail for the
Mott
consultancy
contract. He had not been involved in the process of appointing
Mott
, and to the
best of his knowledge, none of the other officials who ought to have
been involved had been so either. His view
was that Mr Aguma
had acted on his own in contracting with
Mott
.
52.
In short, there is no simply no evidence at
all that the deviation prescripts were followed before Mr Aguma
appointed
Mott
.
In all probability, this is because Mr Aguma did not follow the
requisite procurement process. He did not comply with
the
open-bidding pre-requisite. Instead, he flew solo (albeit, it
would seem, with the knowledge of at least some members
of Group
Exco) in approaching
Mott
to
provide consulting services that effectively entailed the SABC
contracting out to
Mott
the
SABC’s own procurement function. Mr Aguma did not follow
the deviation process in doing so. He treated
Mott
as a sole supplier, contrary to the SCM policy.
He also negotiated with
Mott
contrary to that policy.
53.
The contract was concluded without the
involvement of the Legal Department, as required by the SCM policy.
It was not a standard
contract, but was drawn up by
Mott
itself, on the basis of its standard terms and
conditions.
Mott
proposed
its own fees and payment schedule, which Mr Aguma simply accepted.
54.
The appointment of
Mott
was not, as s 217 requires, fair, equitable,
transparent, or competitive. Furthermore, the appointment was
made in circumstances
where the SABC had already run an open-tender
process for the refurbishment and replacement of lifts and
escalators, as well as
a closed-tender process. Both of these
processes were cancelled, and the tender process instead was handed
over to
Mott
by
Mr Aguma. It is difficult to understand how the appointment in
these circumstances could be cost effective. Mr Aguma
never
explained why the tender process should start from scratch through an
independent consultant. Nor did he, as required,
set out
reasons and motivate why a sole provider should be appointed to do so
on the sole provider’s terms, rather than on
the SABC’s
own terms.
55.
The conclusion of the contract was indeed
grossly irregular and unlawful. It is significant that this
contractual irregularity
was not a once-off incident. Instead,
as demonstrated by the 2017 Proclamation, and the involvement of the
SIU as party in
these proceedings, it was one of many incidents
marking a systemic failure on the part of the SABC management at the
time to follow
proper procurement processes.
56.
Whether or not I should consequently review
and set aside the unlawful contract depends first on the question of
whether the applicants
ought to be non-suited for their delay in
applying for that relief.
DELAY
57.
It is trite that review proceedings must be
instituted without undue delay. While reviews under PAJA must
be instituted within
180 days (subject to a court extending this
period), reviews under the constitutional principle of legality are
not time-bound
in the same way. However, they must be
instituted within a reasonable period after the impugned decision.
58.
It is common cause that the SABC instituted
its review application just over three years after the consulting
contract was concluded.
The SIU instituted its intervention
application on 3 May 2019, just short of four years after the
contract was concluded.
The applicants were obviously aware
that the question of delay was likely to be an issue in their review
applications and each
of them deals with it in their respective
founding affidavits.
Mott
contends that in both cases the explanations for
the delays are unacceptable, and that consequently the delays were
unreasonable
and should not be overlooked.
59.
Before
considering the relevant facts pertaining to the delays, it is useful
to start with the principles that have been established
on this issue
by our highest Court. Two judgments of the Constitutional Court
are particularly instructive, viz.
Gijima
,
and
Buffalo
City
.
These judgments in turn make reference to the earlier judgments in
Khumalo
v Member of the Executive Council for Education: KwaZulu Natal
[19]
(
Khumalo
)
and
Department
of Transport v Tasima (Pty) Ltd
[20]
(
Tasima
I
).
60.
In
cases, like this one, where an organ of state applies to review and
set aside its own decision, it is bound to act diligently
and without
delay. This is a constitutional injunction
[21]
and,
as such, gives rise to an obligation under the rule of law and
legality.
[22]
The
rule against undue delay in self-review cases is thus not simply a
procedural requirement. It is a feature of the rule
of law that
undue delay should not be tolerated, as it can cause prejudice to the
respondent, weaken the ability of the court to
consider the merits of
a review, and undermine the public interest in bringing certainty and
finality to administrative justice.
[23]
61.
In
Buffalo
City
the Constitutional Court
reaffirmed the test for assessing undue delay as set out in
Khumalo
:
61.1.
The
first stage of the inquiry involves determining whether the delay was
unreasonableness. This is a factual inquiry upon
which a value
judgment must be made.
[24]
The
clock starts running from the time that the applicant became aware or
ought reasonably to have become aware of the impugned
action.
[25]
An
explanation for the delay must be given, and it must cover the
entirety of the delay. If there is no explanation for the
delay, it will necessarily be unreasonable.
[26]
61.2.
However,
this is not the end of the matter. Even if the delay is
unreasonable, the court retains a discretion to overlook
it.
[27]
Thus,
the second stage of the inquiry is to determine whether there is a
justifiable basis for overlooking the delay and proceeding
to
consider the application for review. This basis must be
gleaned from the facts made available or objectively available
factors.
[28]
62.
As
to the second stage of the inquiry, courts may adopt a flexible
approach in cases of legality review. A number of factors
should be taken into account. One of these is the potential
prejudice to affected parties, which may be ameliorated by the
power
of a court to grant just and equitable relief under s 172(1)(b) of
the Constitution.
[29]
A
second factor is the nature of the impugned decision. This
requires the court to consider the merits of the legal challenge
to
the impugned decision. The extent and nature of the illegality
in question may be a crucial factor.
[30]
63.
The
third factor to consider is the conduct of the applicant.
Organs of state are subject to a higher duty to respect the
law.
[31]
Implicit
in this, it would seem, is that they, in particular, ought to conduct
themselves in such a way that there is no delay in
the institution of
review proceedings to rectify their own unlawful conduct.
However, the Court recognised in
Buffalo
City
that:
“
Even
where a functionary has not acted as a model litigant or
‘constitutional citizen’, there may be a basis to
overlook
the delay if the functionary acted in good faith or with the
intent to ensure clean governance.”
[32]
64.
And
it noted that in
Tasima
I
,
the Court had overlooked an unreasonable delay because the
application was made in good faith, and although the applicant’s
behaviour had been muddled, it was not malicious. The review
had been part of a conscious effort by the Department to break
with
its dilatory past.
[33]
65.
The majority judgment in
Buffalo
City
referred to what it called “
the
Gijima principle
”:
“
Gijima
dictates that where the unlawfulness of the impugned decision is
clear and not disputed, then this Court must declare it
as unlawful.
T
his
is notwithstanding an unreasonable delay in bringing the application
for review for which there is no basis for overlooking
.
Whether an impugned decision is so clearly and indisputably unlawful
will depend on the circumstances of each case.”
[34]
(emphasis
added)
66.
The
Gijima
principle creates a tension between two competing rule of law
principles. On the one hand the law requires that state organs
timeously seek review. If they delay, they must give an
explanation that is reasonable, or there must be some other
compelling
reason for a court to overlook the delay. As I
indicated earlier, the avoidance of delay principle has both
procedural and
substantive elements. On the other hand, s
172(1)(a) of the Constitution enjoins courts to declare invalid that
which is
inconsistent with the Constitution. This means, as the
majority judgment in
Buffalo
City
notes that the former rule sometimes has to yield to the latter.
[35]
It
concluded in this regard that:
“
The
Gijima
principle should thus be interpreted narrowly and restrictively so
that the valuable rationale behind the rules on delay are not
undermined. At the same time, this is not a matter in which the
Gijima
principle can be ignored and thus impliedly overruled. So the
injunction it creates - to declare invalid that which is indisputably
and clearly inconsistent with the Constitution - must be followed
where applicable.”
[36]
67.
The
majority of the Court found that the applicant failed on both stages
of the
Khumalo
test: it had unreasonably delayed in instituting the review and there
was no basis upon which the delay could be overlooked.
Nonetheless, the majority proceeded to apply the
Gijima
principle. It found that as the contract in question was
clearly unlawful on the undisputed facts, the Court was enjoined
to
declare it invalid and to set it aside.
[37]
68.
The
minority judgment in
Buffalo
City
[38]
was
critical of the manner in which the majority applied the
Gijima
principle. They proposed an alternative route:
“
This
is that, in the absence of adequate explanation for unreasonable
delay, courts should not intervene to inquire into a final
and
determinative holding into unlawfulness, unless the seriousness of
the unlawfulness at issue warrants overlooking the manifest
deficiencies in the state actor’s case.”
[39]
69.
Until the Constitutional Court itself
revisits the
Gijima
principle definitively, it must be applied in accordance with the
majority judgment. As I understand the governing principles
in
this regard, an unreasonable delay is not the end of the matter for
an organ of state seeking to review its own decision.
A court
may overlook the unreasonable delay and nonetheless exercise its
discretion, based on the factors at play, to proceed to
review the
impugned decision. Even if there is no justifiable basis on
which to exercise its discretion in favour of the
applicant, in cases
where the illegality of the impugned decision or conduct is clear and
undisputed, a court will be impelled
to review it and set it aside.
70.
These principles must be applied to the
facts of this case.
71.
If one starts the clock running from the
time that the consulting contract was entered into the unavoidable
conclusion is that there
was considerable delay on the part of both
applicants. The period of delay was three years in respect of
the SABC and almost
four years in respect of the SIU. The SABC
explained in its founding affidavit that while it was still under the
management of
those responsible for the systemic undermining of its
procurement processes, it could not realistically have been expected
to have
acted to rectify the situation by instituting review
proceedings. The two primary wrongdoers in that process were Mr
Motsoeneng
and Mr Aguma. The latter left the employ of the SABC
in June 2017. He resigned while disciplinary proceedings were
under way. Mr Motsoeneng did the same after June 2017.
72.
The SIU records that it only came onto the
scene after the 2017 Proclamation was promulgated, and it cannot
reasonably have been
expected to have considered taking action until
it had carried out its investigative mandate.
73.
The respondent does not seek to pin either
of the applicants to the date from which the contract was entered
into. This appears
to me to be a reasonable approach, given the
situation described above. However,
Mott
contends that even on the most charitable
calculation of time, neither of the applicants has provided a
sufficient explanation to
warrant a finding that the delay was
reasonable or, alternatively, to provide a basis for the court to
overlook the unreasonable
delay.
74.
Mott
points out
that on its own version the SABC was free of the influence of Mr
Aguma and Mr Motsoeneng from mid-2017. The interim
Board of the
SABC was appointed from March 2017. In May 2017 it resolved to
commission the internal forensic report into
five contracts,
including the
Mott
consultancy
contract. The internal report was completed in June 2017.
At this stage, submits
Mott
,
the SABC would have been in possession of all of the information it
needed to institute review proceedings. However, says
Mott
,
it gave no explanation in its founding affidavit for the delay of
over 12 months before it instituting the proceedings in August
2018.
75.
As far as the SIU is concerned,
Mott
points to the affidavits obtained as part of its
investigation under the 2017 Proclamation and attached to its
founding affidavit.
These were commissioned between February
2018 and June 2018.
Mott
says
that at least by June 2018, the SIU would have been in a position to
take steps to launch its review. However, it only
instituted
its intervention application in May 2019. Once again, says
Mott
, there is no
explanation for this period of delay of almost 12 months.
76.
Both of the applicants say that one of the
factors in their delay in launching review proceedings was that the
Mott
contract was
not an isolated incident. The procurement irregularities at the
SABC were a veritable can of worms that, when
opened, released a
string of dubious contracts that had to be investigated, first, and
then, considered for possible legal action.
I accept that this
is a relevant factor in the delay inquiry. However, it is not
enough to overcome the lack of an explanation
for the period of 12
months on the part of both applicants between the time that they
ought reasonably to have been in a position
to take action but failed
to do so. On the first leg of the
Khumalo
test, I find that both applicants delayed unreasonably in instituting
the review proceedings.
77.
But the inquiry does not end here. I
must consider whether the delay ought to be overlooked. Here
the applicants are
on much firmer footing. Critical to this
case is the nature and extent of the irregularity. It involved
a flagrant
disregard for well-established procurement process.
78.
The constitutional imperative for fair,
equitable, transparent, competitive and cost-effective procurement
processes in the public
sphere is an important bulwark against
maladministration, the abuse of the public purse and possible
corruption. Stamping
out unlawful procurement practices is
imperative for good governance, which is critical to the success of
our democracy.
This is why the Constitution itself requires
state entities to follow proper procurement procedures.
79.
In this case the irregularity involved the
SABC, which is a critical organ of state. It is the public
broadcaster. As
such, it serves important constitutional
purposes in facilitating access to information which is fundamental
to the enjoyment of
many other constitutional rights. It is
also the recipient of significant public funding. Good
governance is key to
it serving its very important public purpose.
80.
The
Mott
contract was entered into without any regard for,
or compliance with, the SABC’s procurement processes.
This is undisputed
on the evidence. And it was not an isolated
incident. It formed part of a pattern of dubious procurement
practices
that were serious enough to warrant the President
promulgating the 2017 Proclamation, directing the SIU to investigate
a range
of contracts that the SABC had entered into.
81.
What is more, the systemic undermining of
the procurement processes was but one part of a much broader pattern
of governance failings
by the SABC under the executive leadership of,
among others, Mr Motsoeneng and Mr Aguma. So dire was the
situation that the
National Assembly resolved on 3 November 2016 to
establish an
ad hoc
committee to inquire into the fitness of the SABC Board. In its
final report, dated 24 February 2017, the Committee reported
that:
“
1.3
There is prima facie evidence that the SABC’s primary mandate
as a national public broadcaster has been compromised
by
the lapse of governance and management within the SABC
,
which ultimately contributed to the Board’s inability to
discharge its fiduciary responsibilities.
1.4 The SABC has
consequently
deviated from is mandate as the public broadcaster,
and from providing a platform and a voice to all South Africans to
participate
in the democratic dispensation of the Republic
.
…
1.5 Instead, there
appears to have been a
flouting of governance rules, laws, codes
and conventions
, including disregard for decisions of the courts
and the Independent Communications Authority of Sough Africa …
as well
as the findings of the Public Protector of South Africa .…
This collective conduct:
-
rendered the SABC potentially
financially unsustainable due to mismanagement as a result of
non-compliance with existing policies
and irregular procurement …
.” (emphasis added)
82.
Prior
to this, in 2014 the Public Protector released her report,
“
When
Governance and Ethics Fail
”
.
[40]
The
report followed investigations into allegations of maladministration,
systemic corporate governance deficiencies, abuse of power
and
the irregular appointment of Mr Hlaudi Motsoeneng. The report
found that the allegations were substantiated, and that
the findings
were:
“…
symptomatic
of pathological corporate governance deficiencies at the SABC…
”
.
The fact that it took until 2017 to install an interim Board at the
SABC, and for action to be taken to begin to rectify
the situation
demonstrates how deeply rooted and serious the problems were.
83.
I am bound to give due weight to the
objective context in which the consulting contract was concluded.
The contract was one
worm in a more extensive colony of worms that
slowly but surely consumed the innards of this very important public
institution.
To permit the one worm to wriggle free because of a
delay in the institution of these review proceedings would not serve
the interests
of justice or the rule of law.
84.
It
is important, too, that both the SABC and the SIU are
bona
fide
in seeking to rectify the irregularity. As a responsible organ
of state, the SABC is duty-bound to do so,
[41]
and
the SIU must fulfil its mandate under the 2017 Proclamation.
This court should be slow to permit the delay to impede them
in
carrying out their obligations. Unlike the context within which
the review came before the Constitutional Court in
Gijima
,
there is no reason in this case to conclude other than that the
applicants genuinely seek the review in an effort to ensure clean
governance.
[42]
85.
I need to consider also the prejudice to
Mott
if the delay
is overlooked and the review proceeds. In this case, the relief
the applicants seek is sufficient in my view
to ameliorate the
prejudice. They seek no more than that
Mott
ought to be mulcted in its profits under the
contract. The prejudice does not outweigh the broader interests
of justice that
will be served by proceeding with the review.
86.
I find, then, that this is an appropriate
case in which the court should overlook the applicants’
unreasonable delay.
Consequently, I do not need to go further
and consider the issue that was debated in the Constitutional Court
judgments in
Buffalo City
.
In this case, there is a clear rule of law basis for overlooking the
delay.
REVIEW
AND REMEDY UNDER S 172(1)(b)
87.
I
have found that the awarding of the consulting contract was done
irregularly in contravention of the SABC’s regulatory
procurement
framework.
As such, it undermines the principle of legality and is unlawful.
Under s 172(1)(a), I am enjoined to set
it aside and to declare it to
be void
ab
intio
.
[43]
88.
This leaves the question of a just and
equitable remedy under the remedial powers established in s
172(1)(b), which gives courts
wide remedial powers. The
applicable principles in this regard were discussed recently in a
Full Court of this Division in
Vision
View
. It would serve no purpose
to repeat in full the various dicta that give flesh to the
principles. The main principles
that are relevant to this case
may be briefly summarized as follows:
88.1.
A
Court enjoys a wide discretion under s 172(1)(b) to grant the
remedial relief. It is bound only by considerations of justice
and equity.
[44]
88.2.
The
remedy must be fair to those affected, but it must also vindicate the
rights violated. It must be just and equitable in
light of the
facts and the implicated constitutional principles.
[45]
88.3.
The
default position is that the consequences of invalidity must be
corrected, where this is still possible, or reversed, if prevention
of invalidity is no longer possible.
[46]
88.4.
The
guiding principle is that of legality, and courts should give full
effect to the finding of invalidity in granting remedial
relief.
Relief that does not give full effect to the finding of invalidity
must be justified in the particular circumstances
of the case.
[47]
88.5.
The
just and equitable inquiry is multi-dimensional, and involves a
consideration of factors such as the nature of the irregularity
and
the role of the respective parties.
[48]
88.6.
In
the context of public-procurement matters, the primacy of the public
interest must be taken into account when the rights of other
affected
parties are assessed.
[49]
88.7.
Even
an innocent contractor has no right to benefit from the proceeds of
an invalid contract. This does not mean that it must
suffer a
loss, but any benefit it did derive should not be beyond public
scrutiny.
[50]
89.
As to the latter principle, it is worth
citing in full what Sutherland J said in
MQF,
and which was endorsed by the Court in
Vision View
:
“…
it
is unnecessary that a clear case of complicity (against the
contracting party) is proven; it is enough that the award was tainted
by irregularity. Were it otherwise, the plea of an innocent
tenderer would as a matter of course outweigh the public interest.
The pendulum should usually swing the other way. What one has
not obtained through a fair and transparent process ought not
to vest
any moral claim to retain the spoils.”
[51]
90.
The applicants seek a limited reversal of
the consequences of the consulting contract. They do not ask
Mott
to pay back
the full R4, 9 million it has been paid to date, but only the profit
it made. This is in line with the order that
was granted in
favour of the SABC in
Vision View
.
91.
Mott
sought to
persuade me that because it was what it called an innocent
contractor, it should not be required to disgorge its profits.
I have two difficulties with this submission. In the first
place, as this Court found in
Vision
View
, the principle is clear: even an
innocent tenderer has no right to retain what it was paid under an
invalid contract. In
procurement matters, the public interest
is paramount and the default position ought to be that payments made
should be returned,
unless there are circumstances that justify a
deviation. There are no circumstances here that warrant a
deviation permitting
Mott to retain the profits it made under the
consulting contract.
92.
In the second place, I am not persuaded
that
Mott
was
indeed an innocent contracting party in the broader sense of that
term. It is so that it was Mr Aguma who approached
Mott
and requested it to submit a proposal, and that
there is no taint of corruption on the part of
Mott
.
But that is as far as
Mott
’
s
innocence goes. It is unthinkable that a multi-national firm of
consulting engineers like
Mott
would
have been unaware that the procurement of services by state entities
is strictly regulated. In fact, in the proposal
documents it
submitted to Mr Aguma,
Mott
stated
that it:
“…
seeks
and establishes relationships with suppliers, subcontractors and
other business partners based on mutual respect and
good
governance
.
We undertake appropriate
due diligence in evaluating business partners to assess risk
and
avoid dealing with prospective partners
where there is any
indication of unethical behaviour.
Ethics training is
mandatory for all staff and forms a component of development
programmes spanning the career of every employee
within the company.”
(emphasis added)
93.
Mott
fails to
explain how it missed the boat in not following its own commitment to
good governance and due diligence in this case.
It simply says,
without explanation, that as it was dealing with the SABC’s
senior executives, it was reasonable for it to
assume that the SABC
had followed its own procurement processes. Such conduct on the
part of
Mott
is
not reasonable. It is a case of wilful blindness, and deserves
no exculpation. To accept this as an excuse would
encourage
contracting parties to avoid asking the hard questions necessary to
achieve the objectives of s 217 of the Constitution.
This would
not be in the public interest.
94.
As it is, the SABC and SIU are content to
allow
Mott
to
retain enough of the fees paid to it to cover its reasonable
expenses. Although the SABC disputed in its founding affidavit
that
Mott
had
rendered services that were of benefit to it under the consulting
contract, it ultimately did not dispute that
Mott
had rendered professional services in respect of
which there had never been any complaint. In the circumstances,
I am satisfied
that applicants’ approach to remedial action is
an appropriate way of balancing the competing interests in this case.
The
applicants also ask that a process be put in place under the
order to ensure that the claim for reasonable expenses is
transparent.
I have sought to do so in my order.
95.
Finally, in this regard, it is common cause
that
Mott
has
instituted proceedings to recover what it says are fees still
outstanding under the consulting contract. In view of the
fact
that I have declared that contract to be void, I see no reason why
Mott
ought to be
permitted nonetheless to pursue any further rights it has
thereunder. Its rights are sufficiently catered for
by
permitting it to retain its reasonable costs for the services it has
rendered and for which payment has already been made.
It should
not be entitled to recover anything further from the SABC.
COSTS
96.
The applicants seek a costs order in their
favour. Costs always lie at the discretion of the Court.
In
Vision View
,
the court of first instance ordered that each party pay its own costs
even though it permitted the contractor to retain its profits
under
the invalid agreement. On appeal, the Court ordered the
contractor to disgorge its profits, but left the costs order
intact.
It did so on the basis of the principle espoused in
Allpay
2
to the effect that in cases such as
this: “
There are no real winners
or losers in the ordinary litigation sense. If there is to be a
winner, one hopes it will be the
general public who will gain from
adherence to the rule of law and greater transparency and
accountability…
”.
97.
This case has a similar history to that in
Vision View
.
In addition, I take into account the fact that
Mott
was entitled to answer the allegations that there
was no proof that it had rendered services as against the payments it
received
for its fees. It was also entitled to place on record
that there had been no allegation of corruption or similar conduct on
its part in the matter.
98.
Finally, it is relevant to the question of
costs that
Mott
played
open cards with the applicants. It provided them with a full
set of its audited financial statements in response to
the relief set
out in the SIU’s Notice of Motion. It has also provided a
full breakdown of its costs which, based on
input from an expert, it
says are reasonable. It did this of its own accord. That
exercise will be of value to both parties
when it comes to
implementing my order. All of these factors are persuasive on
the question of costs. It would not
be just to order
Mott
to pay the applicants’ costs. Justice
requires that each party ought to pay its own costs.
ORDER
99.
For all of these reasons, I make the
following order:
1.
The decision of the SABC in or about July
2015 to award a contract to the respondent for consulting services
relating to the replacement
of lifts (the consulting contract) is
unlawful and invalid, and is reviewed and set aside.
2.
The consulting contract concluded between
the parties on 6 July 2015 consequent on that agreement is unlawful
and invalid and is
declared to be null and void
ab
initio
.
3.
Despite the invalidity of the consulting
contract, the respondent is entitled to retain, from the payments
already made to it, an
amount reflecting its reasonable expenses
under the contract, which amount shall be determined on the basis set
out in paragraphs
4-7 below.
4.
The respondent is to provide the SABC,
within 30 days of this order, a detailed breakdown of its reasonable
expenses, verified by
a duly qualified expert.
5.
The SABC shall, within 30 days thereafter,
appoint a duly qualified expert to compile a report as to the
reasonableness of the respondent’s
expenses.
6.
A joint minute is to be prepared between
the experts within 30 days thereafter.
7.
The parties may elect to settle any
remaining dispute as to the amount of the respondent’s
reasonable expenses by way of arbitration,
mediation, or a further
approach to the Court.
8.
The respondent shall pay to the SABC the
balance remaining after the deduction of its reasonable expenses from
the total amount
it received under the consulting contract.
9.
There is no order as to costs.
KEIGHTLEY
J
JUDGE
OF THEHIGH
COURT
GAUTENG
LOCAL DIVISION
This
judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to
the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The date
for
hand-down is deemed to be 27 November 2020.
Date
Heard (by videolink):
13 NOVEMVER 2020
Date
of Judgment:
27 NOVEMBER 2020
On
behalf of the Applicant:
Adv. Jabu Motsepe SC
Adv. Violet Magagane
Instructed
by:
WERKSMANS ATTORNEYS
On
behalf of the First & Second Respondent:
Adv. Anban Govender
Instructed
by:
MORTIMER GOVERNDER ATTORNEYS
[1]
Act
3 of 2000
[2]
Act
1 of 1999
[3]
Act
74 of 1996
[4]
The
section states:
The functions of a
Special Investigating Unit are, pithing the framework of its terms
of reference as set out in the proclamation
referred to in seton
2(1)- …
(c) to institute and
conduct civil proceedings in a Special Tribunal or any court of law
for-
(i)
any relief to which the State institution
concerned is entitled, including the recovery of any damages or
losses and the prevention
of potential damages or losses which may
be suffered by such a State institution;
(ii)
any relief relevant to any investigation;
or …
[5]
Unreported
judgment of the Gauteng Local Division, Johannesburg, Case no.
20801/2019, dated 18 June 2020
[6]
2018
(2) SA 23
(CC)
[7]
2018
(6) SA 348 (CC)
[8]
Para
49
[9]
Para
27
[10]
Para
29
[11]
2019
(4) SA 331 (CC)
[12]
There
is no evidence that a formal Request for Proposal in terms of the
SABC’s Supply Chain Management policy was ever issued,
contrary to this recordal.
[13]
Act
5 of 2000.
[14]
Treasury
Regulation issued in terms of the PFMA, GG 27388, 15 March 2005
[15]
Paragraph
3.4.1 of the Treasury Note
[16]
Paragraph
3.4.
3
of the Treasury Note
[17]
Clause
13.18.1 of the SCM Policy
[18]
Clause
13.10.1 of the SCM Policy
[19]
2014
(5) SA 279 (CC)
[20]
2017
(2) SA 622
(CC)
[21]
In
terms of s 237 of the Constitution, “
All
constitutional obligations must be performed diligently and without
delay
.”
[22]
Khumalo
paras
46-8
,
cited in Gijima at para 43
[23]
Tasima
I
para 160, cited in
Gijima
at
para 48
[24]
Buffalo
City
para
48
[25]
Buffalo
City
para 49
[26]
Buffalo
City
para 52
[27]
Buffalo
City
para 53, citing
Khumalo
para 44
[28]
loc
cit
[29]
Buffalo
City
para 54
[30]
Buffalo
City
para 55-58
[31]
Buffalo
City
para 59-61
[32]
Buffalo
City para 62
[33]
Buffalo
City
para 62
[34]
Buffalo
City
para 66
[35]
Buffalo
City
para 67
[36]
Buffalo
City
para 71
[37]
Buffalo
City
para 101
[38]
Cameron
J & Froneman J with Khampepe J concurring
[39]
Buffalo
City
para 128
[40]
Report
No 23 of 2013/2014
[41]
Merafong
City Local Municipality v Anglogold Ashanti Limited
2017 (2) BCLR 182
(CC) at para 61, cited in
Buffalo
City
at para 61
[42]
Buffalo
City
para 62
[43]
[44]
Vision
View
para 57 citing
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121
(CC) (
Steenkamp
)
para 29
[45]
Vision
View loc cit
[46]
Vision
View
para 58 citing
Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others
(
No
2)
2014 (4) SA 179
(CC) (
Allpay
2
)
para 29
[47]
Vision
View
para 59 citing
Bengwenyama
Minerals (Pty) Ltd & Others v Genorah Resources (Pty) Ltd &
Others
2011 (4) SA 113
(CC) (
Bengwenyama
)
para 84
[48]
Vision
View
para 60 citing
Allpay
2 para 38
[49]
Vision
View
para 61 citing
Allpay
2 paras 32-33
[50]
Vision
View
paras 61-3 citing
Allpay
2 para 67 and
Mining
Qualifications Authority v IFU Training Institute (Pty) Ltd
(
MQA
)
(2016/44912) [2018] ZAPHC 455 (26 June 2018)
[51]
Vision
View
para 63