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2024
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[2024] ZAECMKHC 33
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Soma Initiative Pty Ltd v Premier Eastern Cape Provincial Government and Others (353/2022) [2024] ZAECMKHC 33 (20 March 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
REPORTABLE
Case
No: 353/2022
In
the matter between:
SOMA
INITIATIVE PTY LTD
APPLICANT
and
THE
PREMIER, EASTERN CAPE PROVINCIAL
FIRST
RESPONDENT
GOVERNMENT
THE
MEMBER OF THE EXECUTIVE COUNCIL FOR
SECOND
REPONDENT
HEALTH,
EASTERN CAPE
THE
MEMBER OF THE EXECUTIVE COUNCIL FOR
EDUCATION,
EASTERN
CAPE
THIRD
RESPONDENT
THE
MINISTER OF PUBLIC SERVICE AND
ADMINISTRATION
OF THE REPUBLIC OF
SOUTH
AFRICA
FOURTH
REPONDENT
ALEXANDER
FORBES HEALTH (PTY) LTD
FIFTH
RESPONDENT
PROACTIVE
HEALTH SOLUTIONS (PTY) LTD
SIXTH
RESPONDENT
THANDILE
HEALTH RISK MANAGEMENT (PTY) LTD
SEVENTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
CO-OPERATIVE
GOVERNANCE AND TRADITIONAL
AFFAIRS,
EASTERN CAPE
EIGHTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
COMMUNITY
SAFETY, EASTERN CAPE
NINETH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
ECONOMIC
DEVELOPMENT, ENVIRONMENTAL
AFFAIRS
AND TOURISM, EASTERN CAPE
TENTH
REPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
HUMAN
SETTLEMENT, EASTERN CAPE
ELEVENTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
PUBLIC
WORKS AND INFRASTRUCTURE,
EASTERN
CAPE
TWELFTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
RURAL
DEVELOPMENT AND AGRARIAN REFORM,
EASTERN
CAPE
THIRTEENTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
SOCIAL
DEVELOPMENT, EASTERN CAPE
FOURTEENTH
RESPONDENT
MEMBER
OF THE EXECUTIVE COUNCIL FOR
SPORT,
RECREATION, ARTS AND CULTURE,
EASTERN
CAPE
FIFTEENTH
RESPONDENT
MEMBEROF
THE EXECUTIVE COUNCIL FOR
TRANSPORT,
EASTERN CAPE
SIXTEENTH
RESPONDENT
PROVINCIAL
TREASURY DEPARTMENT FOR THE
EASTERN
CAPE
SEVENTEENTH
RESPONDENT
JUDGMENT
Noncembu
J
Introduction
[1]
This
court, on 27 July 2023, made an order in terms of section 172(1)(a)
of the Constitution, declaring unlawful and invalid and
setting aside
the decision of the first to third respondents and eighth to
seventeenth respondents (the Provincial State respondents)
appointing
the fifth respondent (Alexandra Forbes) as the Health Risk Manager
for the Eastern Cape Provincial Administration. The
said order,
though not taken by consent, was on an unopposed basis.
[2]
The
declaration of invalidity was suspended pending the finalisation of a
process to determine just and equitable relief in terms
of section
172(1)(b) of the Constitution. As part of the order, a process was
set out in terms of which the relevant parties were
to engage and
attempt to agree on what would constitute just and equitable relief
pursuant to the declaration of invalidity. In
the event of the
parties failing to agree on what constituted just and equitable
relief, the matter would be set down for a hearing
relating to that
aspect.
[3]
Directions
and timeframes pertaining to the filing of supplementary affidavits
in the regard were also set out in the order. Costs
occasioned by the
postponement and hearing of the matter on 27 July 2023 were stood
over for later determination.
[4]
As
things turned out, the parties were not able to agree on what
constituted just and equitable relief and have, as contemplated
in
the order, delivered supplementary affidavits dealing with that
issue
[1]
. The matter was set
down for hearing before me on 16 November 2023 on the limited issue
of just and equitable relief in terms of
section 172(1)(b) of the
Constitution flowing from the declaration of invalidity. The
ancillary question of costs, both in relation
to the proceedings
leading up to the order (and the declaration of invalidity) and
thereafter, also remains for determination.
[5]
To
put the matter in its contextual setting, it is necessary to give a
historical background leading up to the order of invalidity.
Background
[6]
The
applicant lodged an application which was set out in two parts. In
part A, which was brought on an urgent basis,
[2]
it sought interim relief which effectively was to interdict and
prevent the Provincial State Respondents from implementing, or
further implementing the appointment of the fifth respondent
(Alexander Forbes) as the Health Risk Manager (HRM) in respect of
the
Eastern Cape Provincial Government pending final determination of the
relief sought in part B.
[7]
In
part B, the applicant sought relief on the following terms:
(a)
That the decision taken by the first respondent (the Premier) to
appoint Alexander Forbes (fifth respondent) as the HRM for
the period
1 January 2022 to 31 December 2024, be declared unlawful, invalid,
and set aside;
(b)
That the applicant be appointed as the HRM for the Eastern Cape
Provincial Government for the aforesaid period alternatively
that the
decision in respect of the appointment of an HRM for the Eastern Cape
Provincial Government be remitted back to the Premier
for final
determination for the period 1 January 2022 for a period of 36 months
thereafter; and
(c)
That the first alternatively fourth respondent further alternatively
first and fourth respondents, jointly and severally, be
ordered to
pay the costs of the application.
[8]
The
genesis to the matter is fully traversed in the judgment of my
brother Laing J, who dealt with Part A of the application. For
purposes of this portion of the application and to set forth the
reasons for the order which were not fully set out when the order
was
made, a brief synopsis relating to the background history of the
matter is apposite.
[9]
Following
an investigation by the DPSA (fourth respondent), certain weaknesses
in the management of sick leave and ill-health retirement
for state
employees were identified in a report which estimated that same
exposed the state to liability in the amount of R20 Billion.
Further
evident in the report was that state employees abused sick leave and
ill-health retirement benefits. It was found that
the high incidence
of incapacity leave and ill-health retirement was the result of
inter
alia,
the absence of a uniform and clear policy on the management
of incapacity leave and ill-health retirement.
[10]
Inconsistencies
in the management of incapacity leave and ill-health retirement,
where a holistic approach applied universally in
government needed to
be adopted, were identified. It became apparent that the high cost of
sick leave and ill-health retirement
necessitated the adoption of a
uniform policy.
[11]
Processes
that followed culminated in the adoption of a policy known as the
Policy and Procedure on Incapacity Leave and Ill-health
Retirement
(PILIR) by Cabinet in or about 2006. The objectives of PILIR were to
ensure that structures and systems would be established
to allow
suitable interventions and the management of incapacity leave to
accommodate temporary or permanently incapacitated employees
and to
address the consequences of such incapacity.
[12]
For
such purposes, and in terms of the policy, Health Risk Managers
(HRM’s) are appointed to assess employees’ applications
for temporary or permanent incapacity leave and ill-heath retirement,
and to make recommendations to the state employer in that
regard.
Health Risk Managers are independent entities, comprising a range of
multi-disciplinary experts but with specialisations
in occupational
medicine. They assess individual applications and provide
recommendations to a Head of Department in either the
provincial or
national sphere of government. This entails an analysis of the
details submitted by an applicant as well as the information
provided
by the applicant’s medical practitioners.
[13]
Originally
the DPSA appointed an HRM for each implementation area, being a
province or a national department. In 2009, there was
a move from a
centralised to a decentralised model, with the effect that a panel
would be appointed from which a provincial or
national department
could select and appoint its own accredited HRM. The DPSA is
responsible for the procurement process to appoint
the accredited
panel of HRM’s, which is done through the Supply Chain
Management Policy of the DPSA. The procurement process
is done
through a Request for Proposals process (RFP).
[14]
The
initial RFP process was issued for the 2012-2013 tender process, for
a 36-month appointment to provide services to the various
provincial
and national departments comprising the 11 implementation areas
[3]
.
Following upon a successful tender process, five entities, including
the applicant, were appointed to an accredited panel of Health
Risk
Managers.
[15]
Subsequent
to the appointment of the panel, successful bidders were invited to
make presentations to various provincial and national
departments, in
accordance with a prescribed format and in relation to pre-determined
issues identified by the DPSA. Delegates
from the various provincial
and national departments then voted for the Health Risk Manager of
their choice.
[16]
For
the 2012-2013 tender, four out of the five successful bidders who
were appointed to the panel went on to receive a fair distribution
of
work from the various implementation areas.
[4]
The Applicant received about 355,000 ‘PILIR lives’ while
the others received about 302,000, 260,000 and 160,000 ‘PILIR
lives’ respectively.
[5]
The Applicant alleges that the distribution amongst the four Health
Risk Managers ensured that each would remain commercially viable
but
points out that there were inherent difficulties with the tender
process overall. Ultimately, the appointments were extended
on
several occasions until 2021.
[17]
During
December 2021 the DPSA issued another RFP for a 36-month appointment
of Health Risk Managers to the panel, commencing 1 January
2022. In
that regard, the DPSA divided the public service into 13
implementation areas, comprising the nine provincial governments
and
four national department clusters. A selection interview would be
held for the various implementation areas, which would consider,
inter alia
, the Health Risk Manager’s capacity and the
implementation areas with regard to which it had previously been
appointed. The
DPSA would provide technical assistance during the
preparations for and conducting of the interviews but would not
participate
in the decision-making process itself.
[18]
As
with the earlier tender, a successful bidder would be required to
enter into a contract with the DPSA for appointment to the
panel,
after which service level agreements would be concluded with the
individual provincial or national departments in question.
Bidders
were invited to match or improve the price stipulated in the RFP,
which was subject to later negotiation.
[19]
Following
the procurement process set out above, four HRM’s, including
the Applicant and the fifth respondent (Alexander Forbes)
were
appointed to the panel of accredited HRM’s and entered into
contracts with the DPSA that contained the same material
terms as
that for the 2012-2013 tender. The applicant takes no issue with this
part of the process.
[20]
The
DPSA arranged for selection interviews to be conducted with the
various provincial departments and national department clusters.
The
interview for the Eastern Cape departments was scheduled for 22
December 2021. Prior to the interview, the DPSA distributed
an
interview questionnaire, indicating the topics to be addressed during
the presentation to be conducted by each successful bidder.
The
interview proceeded and the representatives for the various
provincial departments voted to appoint the Fifth Respondent
(‘Alexander
Forbes’) as Health Risk Manager for the
Eastern Cape.
[21]
It
is with this part of the process that the applicant joined issue. It
alleged that there were a number of problems with the interview
process. More specifically, there was no formal structure for the
adjudication of presentations and how voting would be done. There
were no set criteria to determine how an entity would be appointed to
an individual department.
[22]
To
further compound the situation, the Department of Health and the
Department of Education were not represented during the voting.
This
was problematic inasmuch as these two departments, combined, employed
86.69% of the total workforce in the Eastern Cape Provincial
Government and accounted for 84.62% of the incapacity leave cases and
87.28% of the ill health retirement cases for the period,
2016-2021.
Moreover, the departments paid a combined total of 86.47% of the
monthly or annual fees payable to the Health Risk Manager.
[6]
[23]
Describing
the interview process that was followed, Laing J summed it up as
follows:
‘
Each
Health Risk Manager was required to convey, within less than an hour,
the advantages and benefits of the services to be provided.
This was
to be assessed by representatives of the various departments who were
not involved in the DPSA’s evaluation and
adjudication of the
original bids. The only material available to the above officials was
what the Health Risk Manager communicated
verbally or by means of
slides or a video presentation. Moreover, the officials had no means
by which to verify the submissions
made during the virtual meeting.
To put it bluntly, the departments selected the Health Risk Manager
to deal with the health risk
issues pertaining to the workforce for
the Eastern Cape Provincial Government over a period of 36 months,
entirely on the basis
of a 30- minute sales pitch.’
[24]
I
couldn’t agree more with his summation of the interview
process. The process clearly smacked of the arbitrary manner in
which
the selection was made and the overall absence of objective criteria
used in reaching the decision. The available minutes
also
demonstrated the apparent lack of transparency and fairness
requirements for appointment in terms of section 172(1)(a) of
the
Constitution.
[25]
Given
the above reasons, it therefore behoved me to find that the
appointment of the fifth respondent was unlawful, invalid and
to
accordingly set it aside. It therefore came as no surprise that the
provincial state respondents did not oppose the order.
[26]
I
now turn to the solitary issue for determination before this court.
Just
and equitable relief
[27]
In
its proposition of what would constitute just and equitable relief,
the applicant seeks an order wherein it replaces the fifth
respondent
as the HRM for the Eastern Cape Provincial Government; alternatively,
an order distributing the allocation of the PILIR
lives in the
province between itself and the fifth respondent, or further
alternatively; a remission of the matter for the process
of
appointing an HRM from the panel of HRM’s to be started afresh,
on strict timelines and directions/instructions.
[28]
The
grundnorm in this regard stems from section 172(1)(b) of the
Constitution read with section 8 of the Promotion of Administrative
Justice Act
[7]
(PAJA). Section
172(1)(b) of the Constitution reads as follows:
“
172
(1) When deciding a constitutional matter within its power, a
court –
(a)
…
(b)
may make any order that is just and equitable, including –
(i)
an order limiting the retrospective effect of the declaration of
invalidity; and
(ii)
an order suspending the declaration of invalidity for any period and
on any conditions, to allow the competent authority to
correct the
defect.”
[29]
Section
8 of PAJA provides –
“
(1)
The court or tribunal, in proceedings for judicial review in terms of
section 6(1), may grant an order which is just and equitable,
including orders –
…
(c)
setting aside the administrative action and-
(i)
remitting the matter for reconsideration by the administrator, with
or without directions; or
(ii)
in exceptional cases-
(aa)
substituting or varying the administrative action or correcting a
defect resulting from the administrative action; or
(bb)
directing the administrator or any other party to the proceedings to
pay compensation;
…”
[30]
Invariably,
what becomes evident from the above provisions, is that a
substitution can only be done in exceptional circumstances.
This is
also in line with the common law position.
[8]
Whilst the applicant proposes a substitution as a just and equitable
remedy, nothing in its papers suggests exceptional circumstances
warranting such a remedy.
[31]
The
following common cause factors are germane in this regard: The DPSA
is the custodian of PILIR which regulates sick leave and
absenteeism
in state departments and provides support to the other national
departments and provinces. HRM’s are appointed
to a national
panel in terms of a bid process for a period of three years to run
concurrently with the state employees’ sick
leave policies. The
13 implementation areas established by the DPSA then select an HRM
for their respective departments.
[32]
The
applicant and three other HRM’s (Alexander Forbes, Proactive
Health Solutions and Thandile Health Risk Management) were
appointed
onto the national panel of HRM’s for the period 1 January 2022
until 31 December 2024 after following the aforementioned
bid
process. The said procurement process was constitutionally compliant.
As such the applicant takes no issue therewith.
[33]
The
order of invalidity pertained only to the narrow issue of the
interview process in terms of which the fifth respondent was
selected; which lacked the characters of transparency and fairness
for want of an objective criteria, and from which two departments
which carry the majority of employees and PILIR lives in the
province, did not participate during the voting process
[9]
.
The issue of cost effectiveness did not arise as pricing was
negotiated and a uniform price was agreed upon with all the HRM’s
on the panel.
[34]
It
also cannot be gainsaid that no fault can be placed at the doorstep
of the fifth respondent for what transpired at the interview
on 22
December 2021 and the outcome thereof. Similarly, there can be no
argument that this was a wanton disregard of the constitutional
imperatives of transparency and fairness on the part of the DPSA and
the state provincial state respondents. Nor has it been suggested
that there was explicit bias or incompetence exhibited in the manner
in which the entire process was conducted. The Request for
Proposals
(RFP) makes reference to the process which would be followed, in
particular the selection of the HRM by the implementation
areas. At
the most, the finding of invalidity was premised on the said process
falling short of the requisite standard in terms
of section 172(1)(a)
of the Constitution; nothing more and nothing less.
[35]
A
just and equitable relief is one that properly balances the various
interests which may be affected by it.
[10]
When balancing the various interests, the process must, at the least,
be guided by the objective which comprises of four factors
[11]
:
(a).
it
should effectively redress any harm caused by the violation of the
right;
(b).
it
should strive to deter future violations of the right;
(c).
it
should be capable of being complied with; and
(d).
it
should be fair to everyone who may be affected by it.
[36]
Invariably,
the nature of the right infringed and the nature of the infringement
are significant factors for consideration in the
determination of
just and equitable relief. I have dealt with the nature of the right
infringed and the nature of the infringement
in the preceding
paragraphs. What remains for consideration is what would constitute
just and equitable relief on the circumstances
of the present case.
[37]
In
Steenkamp
NO v Provincial Tender Board, Eastern Cape
[12]
the Constitutional Court held as follows:
“…
In
each case the remedy must fit the injury. The remedy must be
fair to those affected by it and yet vindicate effectively
the right
violated. It must be just and equitable in the light of the
facts, the implicated constitutional principles, if
any, and the
controlling law. It is nonetheless appropriate to note that
ordinarily a breach of administrative justice attracts
public law
remedies and not private law remedies. The purpose of a public
law remedy is to pre-empt or correct or reverse
an improper
administrative function. In some instances, the remedy takes
the form of an order to make or not to make a particular
decision or
an order declaring rights or an injunction to furnish reasons for an
adverse decision. Ultimately the purpose
of a public remedy is
to afford the prejudiced party administrative justice, to advance
efficient and effective public administration
compelled by
constitutional precepts and at a broader level, to entrench the rule
of law.”
[38]
With
the above principles setting the roadmap in the exercise of my
discretion, I now consider the applicant’s proposals with
regards to what would be just and equitable relief on the facts and
circumstances of this matter.
Substitution
of the respondent’s (Provincial State Respondents and the DPSA)
decision with that of the Court
[39]
In
this regard, the applicant proposes that it be appointed as the HRM
for the Eastern Cape for the remainder of the contract term.
Alternatively, it proposes that the distribution of work be split
between itself and the fifth respondent.
[13]
This proposal however, is untenable on three very distinct levels. In
the first instance, the order proposed, in both instances,
only
serves to perpetuate the very illegality complained of, which led to
the appointment of the fifth respondent being set aside.
[40]
All
it does is to arbitrarily replace the unlawfully selected HRM (fifth
respondent) with the aggrieved party (the applicant), or
allocate to
the applicant a portion of the implementation areas, on no basis
whatsoever, to the exclusion of and thus ignoring
the rights of the
other members of the panel (sixth and seventh respondents). Such a
situation erodes the very principle of legality
and the rule of law
and can never be sustained. It is not a question of a court being
entitled to exercise a discretion having
regard to issues of fairness
and prejudice. Rather, the question is one of legality.
[14]
[41]
Secondly,
there is no suggestion nor any evidence on the applicant’s
papers that but for the flawed interview process, its
selection as
the HRM for the Eastern Cape Administration is a
fait
accompli
.
[15]
In
Trencon
[16]
it was held that substitution is an extraordinary remedy employable
where two significant factors are applicable –
(a)
where
a court is in as good a position as the administrator to make a
decision; and
(b)
where
the decision of the administrator is a forgone conclusion.
[42]
It
is not in dispute that the decision in question is polycentric in
nature, as such it cannot be argued, nor is it the applicant’s
case that this court is in as good a position as the administrator to
make the decision, or in this case, the selection of the
HRM. Even on
the applicant’s papers it is acknowledged that a possibility
that the fifth respondent or any of the HRM’s
on the panel,
could be appointed if the process were to be restarted. That in
itself lends support to the proposition that the
appointment of the
applicant as HRM for the Eastern Cape is not a foregone conclusion.
[43]
Lastly,
and perhaps most pertinently in this regard, as is explicitly stated
in section 8(1)(c)(ii) (aa) of PAJA, substitution as
a remedy can
only be utilised in exceptional cases. Stripped to its bare facts,
the matter in
casu
cannot be said to be one falling under the
category of exceptional cases. I expound more on this below when I
deal with the other
propositions on just and equitable remedy.
Remission
of the matter for the selection process to be re-run.
[44]
Initially,
the provincial state respondents and the DPSA were almost
ad idem
with the applicant that this would be an effective remedy on the
facts of the matter, with the only points of departure being the
timeframe within which the process had to be completed, and the
inclusion of the objective criteria in the order of the court.
However, when the matter was argued in November 2023, they had made
an about turn, for reasons that are dealt with below.
[45]
Key
in the submissions made by all the parties is the date on which the
contract in question ends, which is the 31 December 2024.
The
appointment of HRM’s follows the three-year leave cycle
nationally, which cycle ends on 31 December 2024. The argument
by the
provincial state respondents is that when they were agreeable to a
re-run of the selection process there was still more
than a year left
in the contract, and with the time which passed up until the hearing
of the matter, such period has now been reduced
substantially.
[46]
According
to them, supported by the DPSA, given the polycentric nature of the
process, they would need at least 4 months to finalise
the selection
process. This entails that the 13 provincial departments plus the
DPSA would need to first meet in order to agree
on the objective
criteria to be used before an invitation is sent to the HRM’s
in the panel. Although contending that the
objective criteria
proposed by the applicant is reasonable, and would certainly receive
consideration, the emphasis is that it
is not permissible for the
applicant to dictate how the process should be conducted. I can find
no foul with this argument.
[47]
Further
emphasis in this regard is placed on the fact that given the
polycentric nature of the decision in question, it is not one
which
this court could be best suited to make.
[17]
Previously it took the various departments five weeks just to
synchronise their diaries, as such, it is averred that the six weeks
period proposed by the applicant for the completion of the process is
impractical and unreasonable.
[48]
Given
the time-frame that is proposed by the state respondents (four
months), it would mean that there is only about six months
left of
the contract by the time the new HRM is appointed. This, the argument
goes, is problematic for the province as the largest
amounts PILIR
applications are received this time since it is the last year of the
leave cycle.
[49]
The
DPSA, with which the fifth respondent and belatedly the state
respondents form common cause; propose that in the interest of
good
governance and the employees of the Eastern Cape Provincial
Government and their dependants, the order of invalidity be suspended
until 31 December 2024, in order to permit the fifth respondent to
continue to render its services until the end of its contract.
[50]
They
contend that a re-run at this late stage would not only be disruptive
to a discharge by the state of its constitutional responsibilities,
but also opens the potential increase in abuse of sick leave. The
contention thus, is that from a point of practicality and pragmatism,
a further suspension of the order of invalidity until the end of the
contract term would be just and equitable on the facts of
the matter.
[51]
According
to the fifth respondent, by the time the process is re-run, almost
90% of the contract duration would have lapsed by the
effluxion of
time. It therefore avers that this factor,
inter alia
,
self-evidently, renders a re-run impractical and wasteful. This view
enjoys the full support of the state respondents and the
DPSA which
contend,
inter alia
, -
(a)
that
accepting that the fifth respondent is not the chosen HRM, it
would
mean that a new service provider will provide services for a period
of
between 6 to 9 months;
(b)
that
taking into account that a greater part of the contract will have
lapsed by the time the (potential) new HRM takes over, that
it is not
in the interest of government employees, their dependants and
families being employed by the Provincial Governments of
the Eastern
Cape;
(c)
with
the DPSA being the custodian of PILIR, it means that it would not be
in the interest of the persons for whom the policy was
devised, state
employees, their dependants and families;
(d)
if
the fifth respondent is replaced as an HRM, it would have to continue
to process and finalise all applications received by it
and the new
HRM would only deal with new applications; the contention thus is
(e)
that
such may create the opportunity for chaos and cataclysmic
consequences which should be avoided.
[52]
The
fifth respondent contends further, that the applicant does not
approach this court solely in the interests of administrative
justice, but rather, to pursue its own commercial interests. On this
score it argues that the applicant has elected to review and
set
aside the decision only where it was unsuccessful in the tender,
opportunistically leaving its successes in an allegedly flawed
process.
[53]
A
similar argument has been advanced by the state respondents and the
DPSA. According to the DPSA, much as the application professes
to be
concerned with constitutional values and imperatives, when reduced to
its bare bones, it becomes evident that it is a self-serving
application. The DPSA contends that the application is more about the
applicant’s dissatisfaction with the fact that it did
not get a
substantial portion of the “pie”.
[54]
Support
for the above contention is premised on the fact that the applicant,
for the past nine years, had more than a third of the
government
employees under its control as an HRM, received via the same flawed
process. However, when it became clear that its
proverbial slice of
the pie was reduced to less than 10%, and attempts to persuade the
DPSA to influence its selection by the North
West Government as its
HRM failed, it brought the current application.
[55]
Further
lending support to the above argument, is the fact that the applicant
only brought the constitutionality challenge in those
cases where it
was unsuccessful, leaving aside the two where it was successful,
though also flowing from the same flawed process.
[56]
I
find myself constrained to accept that there is a case to be made for
the above argument, especially in light of the primary relief
that
the applicant persists with, even in the absence of any evidence to
support same on the papers. However, it would be injudicious
of me
not to acknowledge that, notwithstanding its self-portrayal as an
innocent tenderer, the fifth respondent is in no different
position
than that of the applicant. Both are commercial enterprises with a
vested commercial interest; seeking to benefit from
a commercial
venture, hence the imperative to oppose the application. This I point
out on the score that none of the parties can
be said to have been at
fault for the flawed process that was conducted.
[57]
It
is a trite principle that a constitutional remedy must be effective
because ‘without effective remedies for breach, the
values and
the rights entrenched in the Constitution cannot be properly upheld
or enhanced.’
[18]
In
that exercise however (determining an effective remedy), one must
bear in mind that the primary purpose of constitutional remedies
is
to vindicate the Constitution and deter future infringements.
[19]
[58]
It
flows from the above that a court has a discretion, closely tied to
the facts of the particular matter, as to what would constitute
just
and equitable relief in a particular matter. In
Bengwenyama
Minerals (Pty) Ltd v Genorah Resources
[20]
(Pty) Ltd
,
the Constitutional Court formulated this as follows:
“…
I
do not think that it is wise to attempt to lay down inflexible rules
in determining a just and equitable remedy following upon
a
declaration of unlawful administrative action. The rule of law
must never be relinquished, but the circumstances of each
case must
be examined in order to determine whether factual certainty requires
some amelioration of legality and, if so, to what
extent. The
approach taken will depend on the kind of challenge presented –
direct or collateral; the interests involved
and the extent or
materiality of the breach of the constitutional right to just
administrative action in each particular case.”
[21]
[59]
In
support of the proposition that the suspension of the order of
invalidity be further extended until the end of the contract,
reference was made to various cases where a similar approach was
followed.
[60]
In
the
locus
classicus
case of
Allpay
[22]
the
Constitutional Court, after having declared administrative action
unlawful and invalid in a prior hearing, fashioned a just
and
equitable remedy where it suspended the declaration of invalidity
pending a process in which a new tender process was to be
initiated
and completed. When SASSA failed to comply with the terms of the
suspension a civil society organisation, Black Sash
Trust, approached
the Constitutional Court for further relief. The court,
inter
alia
,
extended the contract which it had already declared invalid for a
further period.
[23]
[61]
In
Buffalo City Metropolitan Municipality v Asla Construction (Pty)
Ltd
[24]
the court declared a contract invalid but did not set it aside
because it had reached practical completion.
[62]
Similar
considerations applied in
Van
Reenen
[25]
where the court, after having declared invalid a decision which was
marred by ‘formal but material, procedural irregularities’,
did not set aside the decision. Considerations which swayed the court
in
Van
Reenen
are much similar to those applicable in the present matter in that:
(a)
there
were no ulterior motives in the appointments of the respondents;
(b)
the
reasons for the invalidity of the decisions to appoint the
respondents were not ascribed to them – but rather because
of
incorrect composition of the selection committee; and
(c)
the
respondents were appointed, respectively, two and three years prior
to the declaration of invalidity. The court found that ‘setting
aside their appointments may lead to uncertainty and even impair the
function of aspects of the Department for which they are
responsible’.
[63]
Much
as I note the enthusiasm of the applicant in so far as the compressed
timelines which it proposes a re-run of the process could
be
completed (6 weeks), I do not consider this as practical. Given the
polycentric nature of the process and the decision involved,
the
likelihood that a rushed process could lead to similar consequences
where the ultimate decision is facing a constitutional
challenge is
very real, and should be avoided. More so given the time lapse
already in the contract.
[64]
The
DPSA as custodians of PILIR, and the provincial departments being the
ones who deal with these matters on a regular basis, have
the
necessary knowledge, experience and expertise in these processes.
Furthermore, given that I could find no bias, improper motive
or
gross incompetence on their part in the invalid process undertaken, I
have no reason not to defer to their expertise in so far
as the
requisite time for the completion of a new process. The same applies
in respect of the objective criteria for selection.
[65]
I
also take into account the risk that would put the state employees as
beneficiaries of PILIR in the Eastern Cape Province if a
new HRM were
to be appointed at this late stage of the contract. This, taken
together with the considerations referred to above
as well as the
relevant authorities referred to, leads me to the ineluctable
conclusion that a just and equitable remedy, from
a point of
practicality and pragmatism, would be the further suspension of the
order of invalidity (together with the setting aside
of the impugned
decision) until 31 December 2024.
[66]
What
now remains for consideration is the question of costs.
Costs
[67]
In
my view the applicant was substantially successful in the application
in the sense that the constitutionality challenge it had
mounted was
upheld. Whilst it did not receive the order it sought in the form of
just and equitable remedy, this was due mainly
to the effluxion of
time which can in no way be ascribed to it. It lodged the application
shortly after the appointment of the
fifth respondent and could have
no control in the delay in the court processes. There is therefore no
reason why it should not
be entitled to its costs. I am however not
persuaded that the matter was such as to warrant the employment of
three counsel. I
take note of the complexity of the matter and the
number of counsel employed in respect of the various respondents.
However, given
the nature of the constitutionality challenge raised,
as well as the inherent facts and circumstances of this matter, I am
of the
firm view that two counsel would have sufficed.
[68]
I
am also not persuaded by the fifth respondent’s argument that
it should not be ordered to pay costs as it was obliged to
defend
itself in the matter, or that the state respondent’s should be
ordered to pay its costs. As stated elsewhere in this
judgment, no
fault was placed on the fifth respondent for the flawed process that
was undertaken. The fifth respondent thus, elected
to participate in
the litigation in order to protect its commercial interests, as it
was entitled to do so. Such, however, goes
hand in glove with the
risk that one might have to bear the costs should they not be
successful.
Order
[68]
In
the premises therefore, I make the following order:
(a)
The
suspension of invalidity as set out in paragraph 2 of the order of
this Court of 27 July 2023 is extended until 31 December
2024.
(b)
The
first to the fifth respondents and the eighth to the seventeenth
respondents are to pay the applicant’s costs, including
costs
occasioned by the postponement and hearing of the matter on 27 July
2023, plus costs of
two
counsel
where so employed; jointly and severally, the one paying the others
to be absolved.
V
P NONCEMBU
JUDGE
OF THE HIGH COURT
APPEARANCES
Counsel
for the Applicant:
R G Buchanan SC
P
B J Farlam SC
D
Van Reenen
Instructed
by:
Whitesides Attorneys,
Makhanda
Counsel
for the 1
st
to 3
rd
and 8
th
to 17
th
Respondents:
S C Rorke SC
A Rawjee
Instructed
by:
Huxtable Attorneys
Makhanda
Counsel
for the 4
th
Respondent:
M C Erusmus SC
Instructed
by:
Office of the State Attorney
Makhanda
Counsel
for the 5
th
Respondent:
J Babamia SC
Instructed
by:
Nettletons Attorneys
Makhanda
Date
of hearing: 16
November 2023
Date
judgment delivered:
20 March 2024
[1]
Just
and equitable relief.
[2]
Set
down on 1 March 2022.
[3]
These
entailed all provincial and national departments, excluding the
South African Police Service.
[4]
The
Applicant notes that only Metropolitan Health Risk Management (Pty)
Ltd received no work. It can advance no reason for why
this was so.
[5]
The
allocation was presumably done with reference to the number of
employees or ‘PILIR lives’ (as the Applicant terms
it)
for each implementation area. Evident from this allocation is that
the applicant received the largest number of employees/PIRIL
lives,
and consequently the largest portion of the payment since the
negotiated pricing was per employee allocated.
[6]
As
extracted from the judgment of Laing J in Part A of the application.
[7]
Act 3 of 2000.
[8]
Which
has since been codified in section 8 of PAJA.
[9]
Such
voting process having been the one which led to the fifth respondent
being appointed as the HRM for the Eastern Cape Province.
[10]
Hoffman
v South African Airways
2001
(1) SA 1
(CC) at para (45).
[11]
Ibid.
[12]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007
(3) SA 121
(CC) para 29; 2007 (3) BCLR 300 (CC)
[13]
That
it be allocated the Departments of Education and Health, which would
mean that it carries about 50% of the PILIR lives in
the province,
whilst the fifth respondent carries the rest. This, the
applicant contends, would result in a fair distribution
of work.
[14]
Municipal
Manager: Qaukeni Local Municipality and Another v FV General Trading
CC
2010
(1) SA 356
(SCA) at [14]; also referred to in
Metropol
Consulting (PTY) LTD v City of JHB Metropolitan Municipality and
Another
[2020] ZAGPJHC 392
[15]
Trencon
Construction v Industrial Development Corporation
2015 (5) SA 245
CC (
Trencon
).
[16]
Ibid.
[17]
Trencon
,
n 13
supra
.
[18]
Ackerman J,
Fose
v Minister of Safety and Security
[1997] ZACC 6
;
1997
(3) SA 786
(CC) para 69.
[19]
Kriegler
J,
Fose
supra
,
para [96];
Tswelopele
Non-Profit Organisation v City of Tshwane metropolitan Municipality
2007 (6) SA 511 (SCA).
[20]
Bengwenyama
Minerals (Pty) Ltd v Genorah Resources
2011 (4) SA 113
(CC), para 85.
[21]
Footnotes
omitted.
[22]
Allpay
Consolidated Investment Holdings (Pty) Ltd & Others v Chief
Executive Officer, South African Social Security Agency
& Others
(No.
2)
2014 (4) SA 179
(CC) .
[23]
Black
Sash Trust v Minister of Social Development & Others (Freedom
Under Law Intervening)
2017
(3) SA 335 (CC).
[24]
2019
(4) SA 331
(CC). See also
Chairperson:
Standing Tender Committee v JFE Sapela Electronics (Pty) Ltd
2008 (2) SA 638
(SCA) where the court was swayed by considerations
of finality, pragmatism and practicality, not to set aside an
unlawful award
of a tender; see also
Millenium
Waste Management v Chairman, Tender Board: Limpopo Province
2008 (2) Sa 481
(SCA).
[25]
Minister
of Social Development, Western Cape Provincial Government and
Another v Van Reenen and Another
(C634/2022)
[2023] ZALCCT 53 (22 August 2023).