Brief Summary

Tender — Review of tender process — Applications by incumbent service provider and industry representatives challenging the MEC's decision to tender subsidised bus services — MEC's purported approval for deviations from tender requirements questioned — Minister's withdrawal of concurrence to tender process cited as central issue — Court finds that the tender process remains live despite MEC's undertaking to halt evaluation, and that the lack of sustainable planning and funding renders the tender irrational and unlawful — Applications for review granted.

Comprehensive Summary

Summary of Judgment

1. Introduction

These proceedings comprised two related applications heard together (by special allocation but not formally consolidated) in the Gauteng Local Division, Johannesburg. The disputes arose in the context of contracting and regulation in the subsidised commuter bus industry in Gauteng, and concerned the lawfulness and continued existence of a provincial tender process for subsidised commuter bus services.

In the first matter, PUTCO (Pty) Limited (the incumbent operator) applied against the MEC for Roads and Transport, Gauteng and the Minister of Transport, together with numerous joined tenderers and other interested parties. PUTCO initially sought to review and set aside the tender under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and/or on the basis of illegality, and alternatively sought to interdict the tender process and obtain declaratory relief regarding the statutory preconditions for tendering under the National Land Transport Act 5 of 2009 (NLTA).

In the second matter, the Trustees for the Time Being of the Bus Industry Restructuring Fund and the Southern African Bus Operators Association (SABOA) brought a similar application against the Gauteng and National transport authorities (and the Minister), aligning their grounds with PUTCO and emphasising labour-related concerns arising from the tender’s interaction with long-standing industry arrangements.

The procedural history included urgent interim relief. Both applications were brought in two parts. Part A, seeking urgent interim interdicts pending review, was heard by Mudau J and dismissed. Part B (the review and final relief) proceeded under directives issued by the Deputy Judge President, including the filing of the record in terms of Uniform Rule 53.

A decisive development occurred shortly before the Part B hearing. The State Attorney, acting for the MEC, proposed that the matter be removed from the roll on the basis that the tender would be placed “on hold,” referring to a written communication from the Minister indicating that the Minister had withdrawn his concurrence to advertise the tender. This shift materially affected the character of the final relief pursued and ultimately granted.

The general subject-matter of the dispute was the MEC’s decision to invite bids (tender) for road-based subsidised public commuter services in several Gauteng areas, and whether that tender could lawfully proceed in light of statutory requirements, transport planning and funding considerations, and entrenched contractual arrangements in the bus industry.

2. Material Facts

The tender at issue related to subsidised commuter bus services in Gauteng for, among other areas, Soweto, Hammanskraal, Tembisa/Tsakane/Vosloorus, Soshanguve, Mabopane/Garankuwa, Sebokeng, Orange Farm/Lenasia, and Atteridgeville/Mamelodi. PUTCO was the incumbent service provider for the services covered by the tender and had been so for decades.

A material feature of the statutory framework was that the MEC’s tender was required to utilise prescribed requirements and model tender documents under the NLTA unless the Minister agreed in writing to deviations. The MEC sought the Minister’s approval for deviations and contended that such approval had been granted. The tender was thereafter advertised in October 2021, and both PUTCO and the SABOA/Fund applicants launched their review applications during October 2021.

While the applicants were unsuccessful in obtaining urgent interim interdicts, the tender process continued to the extent that bids were received. However, it emerged that there had been contention among the state respondents, and that the Minister later communicated a materially different stance.

In February 2022, the State Attorney informed the applicants’ attorneys that the Minister had issued a written communication indicating that he had withdrawn his concurrence to advertise the tender. In consequence, the MEC undertook not to take further steps pertaining to the tender and contended that the litigation had become moot. The applicants disputed mootness, on the basis (accepted by the court) that the tender document remained published and the tender process remained “live,” albeit suspended, and could be revived.

The Minister’s stated position (as reflected in correspondence described in the judgment) was that more planning was required to ensure sustainability of any contracts concluded pursuant to the tender, both from a transport-planning and funding perspective. The Minister referred to ongoing engagements involving National Treasury and the Auditor-General, aimed at creating a uniform national approach and a sustainable public transport funding model. The judgment treated it as undisputed that proper planning and sustainable funding were inextricably linked to the authority to put subsidised services out to tender, and it recorded that the MEC did not dispute the Minister’s indication that these foundations were not in place.

The broader background to the contractual environment was central to the context in which the dispute was evaluated. Historically, subsidised bus services had been provided through “evergreen” permits. Post-1994 policy shifted toward competitive tendering, and incumbent operators agreed to forgo evergreen permits in exchange for Interim Contracts as a bridging mechanism pending tendered contracts. In Gauteng, Interim Contracts remained in place for many years. In 1999, Government, labour unions, and bus operators concluded the Tripartite Agreement (TA), which included terms relevant to the transition to tendering, including a right of first refusal for incumbents and requirements affecting sub-contracting and levies.

The court recorded as not in dispute that the TA’s terms existed, that the applicants had vested rights arising from the TA, and that the impugned tender process failed to take account of those rights. The judgment also recorded that eight Interim Contracts in Gauteng (accounting for a significant portion of Gauteng’s bus operations) were to be replaced by the tender, and that these Interim Contracts had been extended periodically by agreement, including an extension as recently as 2020 until 2023.

Documents included in the Rule 53 record also indicated that planning was ongoing and incomplete. A City of Johannesburg report (October 2020) described a phased process to develop and evaluate an Integrated Public Transport Network up to 2025. A Gauteng 25-year integrated transport master plan (November 2020) included proposals and a financing plan from which it emerged that funding fell short of requirements for the envisaged system. The court treated these materials as contextual support for the Minister’s concerns about planning and funding sustainability.

3. Legal Issues

The central legal questions the court was required to determine were shaped by the change in stance by National Government. The primary issue became whether, in light of the Minister’s withdrawal of concurrence and the acknowledged need for further planning and funding engagement, the tender process could lawfully continue and, if not, what remedy was appropriate.

The dispute also raised questions concerning the legal effect of administrative decisions and their withdrawal. The MEC contended that the tender had been validly issued with ministerial approval and that the Minister could not simply withdraw consent without a formal self-review of the earlier approval, invoking the principle that administrative decisions stand until set aside. The applicants contended, conversely, that the Minister had taken a decision to withdraw consent and that such decision stood unless set aside, and they maintained that the tender should be withdrawn rather than merely put “on hold.”

In addition, the court was asked to determine whether it should grant declaratory relief to the effect that contracting authorities were not permitted to tender subsidised service contracts under NLTA section 42 unless and until compliant integrated transport plans and integrated public transport networks were in place. This raised questions about the court’s jurisdiction and discretion to issue declarations under section 21(1)(c) of the Superior Courts Act 10 of 2013, and whether the relief sought would improperly constrain executive and administrative functions.

A further legal issue was the MEC’s counter-application (spanning both matters) in the nature of a self-review seeking to set aside the Tripartite Agreement, which the MEC contended was unconstitutional. This presented questions about an organ of state’s ability to mount a reactive validity challenge to longstanding arrangements and the relevance of delay and expedience.

Overall, the matters involved questions of law and legality, including the application of administrative-law principles to the facts and the court’s exercise of remedial discretion (particularly as to whether review or interdictory relief was appropriate, and whether declaratory relief should be granted).

4. Court’s Reasoning

The court treated the Minister’s withdrawal of concurrence and the acknowledgment that more planning and sustainable funding arrangements were required as having fundamentally altered the character of the litigation. It regarded the continued existence of the tender (published but “on hold”) as leaving an inchoate administrative process in place, capable of revival, and therefore not moot. The court accepted that the applicants remained entitled to seek final relief because the tender remained “live” notwithstanding the MEC’s undertaking not to proceed.

In addressing the MEC’s argument that the Minister could not lawfully withdraw consent without first setting aside the original concurrence, the court considered the competing contentions as to the effect of administrative decisions. However, it regarded the parties’ debate about the technical status of the Minister’s withdrawal and the MEC’s reliance on the continuing validity of earlier approvals as a distraction from the practical and legal reality that, on the state’s own version, the tender could not properly be realised without national support and sustainable planning and funding foundations.

The court reasoned that, given the policy-centric and planning-dependent environment in which subsidised bus tenders operate, proceeding with a tender process that lacked the Minister’s support was an exercise in futility, and that it would likely generate extensive and costly litigation and prolonged uncertainty in the industry. The harm identified was not confined to commercial inconvenience; it included the frustration of the applicants’ entitlement to just administrative action in circumstances where the tender process, without proper national backing and planning coherence, would not be capable of effective implementation.

On remedy, the court held that review relief was not, in the circumstances, the appropriate mechanism. Instead, PUTCO had made out a case for interdictory relief preventing further advancement of the tender. The court accepted that the applicants had a clear right (grounded in administrative justice), that harm would follow from allowing the tender to proceed in its inchoate state, and that the continuation of the tender would frustrate that right by perpetuating a process likely to fail and to spawn further disputes.

As to the request for a declaration concerning the interpretation and operation of NLTA section 42 (that no tender could proceed without integrated transport plans and integrated public transport networks), the court rejected the relief. It held that it did not have jurisdiction under section 21(1)(c) of the Superior Courts Act to grant the declaration in the form sought because it would amount to an advisory function rather than determining an appropriate dispute in the concrete circumstances. The court further held that, even if jurisdiction existed, it would not exercise its discretion to grant such declaratory relief because it risked constraining the further administrative functions of the Minister, the MEC, and National Treasury. The court also treated the non-joinder of National Treasury as a fatal impediment to granting such relief.

Regarding the MEC’s counter-application to set aside the Tripartite Agreement, the court treated the counterclaim as reactive and expedient. It relied on the principle (drawn from authority referred to as Tasima in the judgment) that an organ of state may only be permitted to rely on a reactive challenge to escape the effects of its own decision where its reasons are sound and there is no unwarranted delay. The court regarded the delay as unprecedented and the reasons questionable in the context of the timing of the tender dispute. It also noted that the MEC did not answer the allegation that the Rule 53 record did not show that the MEC had considered the Tripartite Agreement when deciding to embark upon the tender and finalising its parameters, a factor the court indicated could itself constitute a review concern. The court considered it unhelpful and unnecessary, in the circumstances, to decide issues concerning the constitutionality of entrenched historical arrangements at that stage, particularly where further planning processes were underway.

On costs, the court held that the applicants had no choice but to bring the proceedings and that the tender process was, in light of the later acknowledgment of unreadiness and the Minister’s withdrawal, ill-considered. It declined to make an adverse costs order relating to the participation of one tenderer (Litsamaiso (Pty) Ltd), reasoning that its level of engagement did not justify such an order and that it had not established entitlement to costs. The court ordered costs against the relevant first and second respondents, including the costs of two counsel (but not three).

5. Outcome and Relief

The court granted final interdictory relief in both applications. In each matter, the relevant first and second respondents were interdicted from taking any further action in the advancement of the impugned tender.

The court dismissed the MEC’s counter-application seeking to set aside the Tripartite Agreement.

The court ordered the relevant first and second respondents to pay the applicants’ costs in each matter, including the costs of two counsel.

Cases Cited

Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA)

Legislation Cited

Promotion of Administrative Justice Act 3 of 2000

National Land Transport Act 5 of 2009

Superior Courts Act 10 of 2013

Rules of Court Cited

Uniform Rule 53

Held

The court held that the tender process, though purportedly initiated with ministerial concurrence, was no longer supported by National Government following the Minister’s communicated withdrawal of concurrence and stated need for further planning and sustainable funding engagement. In those circumstances, allowing the tender to remain capable of progression would frustrate the applicants’ entitlement to just administrative action and would likely generate protracted, costly, and disruptive litigation in a policy- and planning-dependent environment.

The court held that interdictory relief was the appropriate remedy in the changed circumstances, rather than determining the wide-ranging review issues and constitutional challenges implicated by the tender and the Tripartite Agreement.

The court held that it would not grant the declaratory relief sought concerning NLTA section 42 and integrated transport planning, both because it found it lacked jurisdiction to provide advisory-type declarations in the form sought and, in any event, because it would not exercise its discretion to issue a declaration that might constrain the administrative functions of the transport authorities and National Treasury; the absence of National Treasury as a joined party was also treated as a decisive obstacle.

The court held that the MEC’s reactive counter-application to set aside the Tripartite Agreement fell to be dismissed in light of the nature of the challenge and the delay, and that the applicants were entitled to costs against the relevant first and second respondents.

LEGAL PRINCIPLES

The judgment applied the principle that administrative-law remedies are context-sensitive, and that where the continuation of an administrative process (here, a tender remaining “live” though paused) threatens to undermine the right to just administrative action and to cause avoidable harm and future litigation, interdictory relief may be an appropriate remedy even where review relief is also sought.

The judgment accepted that the practical viability of a subsidised public transport tender is inextricably linked to broader requirements of integrated planning and sustainable funding, and that proceeding with a tender process lacking the necessary national support and planning foundation is irrational in the remedial sense that it invites futility and foreseeable harm.

The judgment proceeded on the understanding that, under the principle articulated in Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA), administrative decisions generally stand as legally effective unless and until set aside by a competent court, although it treated the dispute about the formal status of the Minister’s withdrawal as secondary to the decisive reality that the tender could not properly proceed without national buy-in.

The judgment applied the principle (referred to via Tasima in the text) that organs of state are not readily permitted to raise reactive challenges to escape the consequences of their own longstanding decisions or arrangements, particularly where there has been unwarranted delay and where the challenge appears expedient in the context of contemporaneous litigation.

The judgment also reflected the principle that courts will not grant declaratory relief where doing so would effectively place the court in an advisory role, would unduly constrain executive or administrative decision-making, or where a materially interested party (here, National Treasury) has not been joined.

PUTCO (Pty) Limited v MEC for Roads and Transport, Gauteng and Others; Trustees for the Time Being of the Bus Industry Restructuring Fund and Another v Gauteng Department of Roads and Transport and Others (49674/2021; 51091/2021) [2022] ZAGPJHC 211 (11 April 2022)