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[2022] ZAECGHC 7
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Algoa Bus Company (Pty) Ltd v Nelson Mandela Bay Metropolitan Municipality and Others (2202/2019) [2022] ZAECGHC 7 (15 February 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
[EASTENR
CAPE DIVISION: GRAHAMSTOWN]
CASE
NO. 2202/2019
In
the matter between:
ALGOA
BUS COMPANY (PTY)
LTD
Plaintiff
and
NELSON
MANDELA BAY METROPOLITAN MUNICIPALITY
1
st
Defendant
SPECTRUM
ALERT ITS (PTY)
LIMITED
2
nd
Defendant
ALGOA
TAXI
ASSOSIATION
3
rd
Defendant
NORTHERN
AREAS TAXI
ASSOCIATION
4
th
Defendant
MEMBER
OF THE EXECUTIVE COUNCIL FOR TRANSPORT
AND
PUBLIC WORKS: EASTERN
CAPE
5
th
Defendant
MINISTER
OF
TRANSPORT
6
th
Defendant
JUDGMENT
JOLWANA
J
[1]
The plaintiff is a bus operator providing scheduled bus services
within the area of jurisdiction of the first defendant.
The
said bus services are provided pursuant to Interim Contract Number
IC67/97 which was concluded in terms of the National Land
Transport
Act No.5 of 2009 (the Act). That interim contract was concluded
in March 1997 between the plaintiff and the sixth
defendant.
The sixth defendant ceded and assigned all its rights in terms of the
said interim contract to the Eastern Cape
Provincial Department of
Transport. Various addenda were thereafter concluded between
the plaintiff and the Eastern Cape
Department of Transport since the
conclusion of the interim contract in 1997. The latest addendum
applicable to this matter
is addendum No.11 which was concluded in
April 2019 for a two-year period.
[2]
The first and second defendants concluded a Vehicle Operating Company
Agreement (VOCA) in September 2017 annexed to the plaintiff’s
particulars of claim as annexure “POC3” and annexure “A”
to the first defendant’s plea for the operation
of starter bus
services. It is alleged that the third and fourth defendants
are shareholders in the second defendant.
The second defendant,
acting through the members of the third and fourth defendants provide
transport services at certain locations
as set out in the VOCA in
terms of which it is appointed as an operator. The second
defendant is paid service fees and the
third and fourth defendants
are paid a government subsidy for the provision of transport services
including the Cleary Park to
Port Elizabeth Central Business District
route.
[3]
This route, pleads the plaintiff, is in all material respects a
duplication of some of the plaintiff’s authorised routes
and/or
sections thereof. The plaintiff pleads that the provision of
transport services by the second defendant pursuant to
the VOCA has
caused the plaintiff to suffer a loss of income in respect of certain
identified routes. The plaintiff further
pleads that the VOCA
is not a negotiated contract as contemplated in section 41 of the
Act. In particular, the VOCA is not
consequent upon
negotiations as contemplated in section 41 of the Act which in terms
of section 41(2), must include negotiations
with the plaintiff.
[4]
The plaintiff pleads that the conclusion of the VOCA, and therefore
the payment of service fees to the second defendant and
the payment
of subsidies to the third and fourth defendants in terms thereof are
invalid and fall to be declared as such and set
aside in that the
VOCA is not an agreement contemplated in section 41 or the one
contemplated in section 46 of the Act. Furthermore,
the said
contract was not put out to tender and accordingly it is not in
compliance with section 217 of the Constitution in that
it was not in
accordance with a system that is fair, equitable, transparent,
competitive and cost effective. The conclusion
of the
VOCA also did not comply with the first defendant’s Supply
Chain Management Policy contemplated in section 111 of
the Local
Government: Municipal Finance Management Act 56 of 2003 read with the
Municipal Supply Chain Management Regulations published
in terms
thereof.
[5]
On these bases the plaintiff instituted action proceedings seeking,
in the main, compensation for damages allegedly suffered
by it
consequent upon the authorisation of the second defendant to operate
outside the confines of the Act thus in breach of the
principle of
legality and the payment of subsidies to the third and fourth
defendants all of which caused the plaintiff to suffer
damages in
that it lost passengers over the affected routes.
[6]
It is common cause that in order for the plaintiff to successfully
pursue its damages claim it must first obtain an order reviewing
and
setting aside the VOCA in terms of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA). Indeed the plaintiff
seeks the
said order and also seeks condonation of any delay in launching these
proceedings and an extension of the 180-day period
envisaged in
section 7(1) (
b
) of PAJA. The said condonation and
extension are sought in terms of section 9 of PAJA on the basis that
it is in the interests
of justice to condone the delay and extend the
180-day period to at least one day after the service of the summons
commencing action
on the defendants. This, only in the event
that it is found to have instituted this action after the expiry of
the 180-day
period provided for in section 7(1) (
b
) which it
denies.
[7]
No order is sought against the third, fourth, fifth and sixth
defendants. They also did not defend the action nor
participated
in these proceedings. The second defendant
initially defended this action and in that regard, filed its pea.
However,
it later filed a notice of withdrawal of its defence as well
as a notice to abide the decision of this Court. Only the first
defendant pursues its defence of the action in respect of all the
orders sought.
[8]
In its plea, the first defendant admits the agreement referred to
above as VOCA. It also admits that the second defendant
is
appointed as an operator as defined in clause 1.73 of the VOCA and
that it remunerates the second defendant as agreed between
itself and
the second defendant. Especially, the first defendant admits
the pleaded terms of the VOCA to the extent that
they are pleaded
consistently with the agreement itself. Most importantly, the
first defendant admits that certain routes
utilized by the second
defendant do in fact overlap with some of the plaintiff’s
routes to some extent.
[9]
Prior to the commencement of the trial, the plaintiff and the second
defendant sought and obtained an order of this Court by
agreement,
separating the issue of the declaration of invalidity of the VOCA
from the rest of the other issues in dispute in the
pleadings.
There are two other issues that, for obvious reasons, need to be
resolved first which have been raised pertinently
in the pleadings.
These are whether the plaintiff unreasonably delayed in instituting
these proceedings. If so the
second related issue is
condonation of such delay and the extension of the 180-day period
referred to in section 7 of PAJA to at
least one day after the
service of the summons commencing the action in terms of section 9 of
PAJA.
[10]
The plaintiff issued the summons commencing action in these
proceedings on 22 July 2019 and the summons was served on the first
defendant on 24 July 2019. The plaintiff contends, in the first
instance, that as a matter of law it is entitled to seek
an order
setting aside by way of action proceedings or as part thereof, the
administrative action on the grounds contemplated in
PAJA. The
first defendant did not appear to be contesting the plaintiff’s
right to do so by way of action proceedings
as against motion
proceedings. This indeed is the correct legal position in my
view for the reasons that will become clearer
hereinafter.
[11]
Section 1 of PAJA defines an “administrative action” as
any decision taken or any failure to take a decision, by
-
“
(
a
)
an organ of state, when –
(i) exercising a power in
terms of the Constitution or a provincial constitution; or
(ii) exercising a public
power or performing a public function in terms of any legislation; or
(
b
) …”
[12]
The first defendant admits that in entering into the VOCA it did so
as provided for in section 41 of the Act and therefore
it was
performing a public function. While it is more common than
otherwise that litigants would institute motion proceedings
when
seeking to set aside an administrative action, section 6 of PAJA
specifically refers to any person instituting proceedings
in a court
or tribunal for judicial review of an administrative action.
The word “proceedings” when not prefixed
by the word
“action” or “motion” refers to both action
and motion proceedings. Therefore, it would
be perfectly in
order for a litigant to institute action proceedings, if so minded,
and not motion proceedings when seeking an
order for the review and
setting aside of an administrative action.
[13]
In its pleadings the plaintiff has given some explanation of the
circumstances in which the action was only instituted in July
2019
and not earlier. The plaintiff’s central contention in
that regard is that it instituted the action without unreasonable
delay and in any event, not later than the 180-day period referred to
in section 7(1) of PAJA. Section 7 (1) provides thus:
“
Any
proceedings for judicial review in terms of section 6(1) must be
instituted without unreasonable delay and not later than 180
days
after the date -
(a)
subject
to subsection (2)(c), on which any proceedings instituted in terms of
internal remedies as contemplated in subsection (2)
(
a
)
have been concluded; or
(b)
where
no such remedies exist, on which the person concerned was informed of
the administrative action, became aware of the action
and the reasons
for it or might reasonably have been expected to have become aware of
the action and the reasons.”
[14]
In its particulars of claim the plaintiff annexed the VOCA as
annexure “POC3”. That document is the exact
replica
of annexure “A” to the first defendant’s
consequentially amended plea. However, it is the plaintiff’s
contention in its consequentially amended replication that it was
made aware of the agreement on delivery of the first defendant’s
consequential plea being the agreement signed by both parties which
was annexed thereto. The plaintiff therefore denies having
instituted the action outside of the time constraints imposed by
section 7 (1). However, even in the original plea,
the
first defendant never proffered any disavowal of “POC3”
which was signed only on behalf of the first defendant
and not the
other party thereto which is the second defendant. In fact, if
anything the first defendant confirmed the authenticity
of “POC3”
only pointing out that it was in possession of a copy signed by both
parties.
[15]
The plaintiff’s contentions with respect to “POC3”
̶ on which it in any event relied for
the
institution of this action about the fact that it was signed only by
the first defendant are clearly untenable. This
is so for a
number of reasons. First, the action was instituted long before
April 2021 when the plaintiff claims to have
had sight of annexure
“A” signed by both parties for the first time. No
better information could have been gleaned
from annexure “A”
which was not part of or contained in “POC3”. There
is no evidence that the first
defendant ever distanced itself or
attempted to disavow or dispute the authenticity of “POC3”.
[16]
The evidence of Mr Brink, one of the plaintiff’s directors and
its only witness, included the narration that after the
2010 soccer
world cup for which certain commuter transportation arrangements were
made by the first defendant including the acquisition
of 24
articulated buses, the first defendant embarked on a process to
formalise the taxi industry. This was done in preparation
for
integrated transport services as envisaged in section 41 of the Act.
This section 41 process, properly undertaken should
include the
plaintiff, the taxi industry and other smaller bus operators in Port
Elizabeth. In or about 2013 the plaintiff
decided to assist the
plaintiff in that pilot project for about a year. From
2014-2017 the first defendant worked on operational
plans until the
plaintiff saw some buses operating in 2018. They had, for a
while been writing letters and making numerous
attempts to engage the
first defendant asking for their inclusion in what they understood to
be a section 41 process and in which
they should ordinarily be
included. In a letter dated 23 March 2018 the first defendant’s
municipal manager assured the plaintiff
that their apparently
lucrative route, Cleary Park – CBD route would not be
duplicated by the starter bus service.
They were also assured
that should it be determined that there was compensation due to the
plaintiff because of the starter bus
service, the plaintiff would be
compensated. In May 2018 the plaintiff not only became aware of
the starter bus service operating
in its area but also it became
aware of its impact on its income-generating capacity because of the
starter bus service overlapping
on the Cleary Park route. I do
feel that to the extent that the plaintiff felt that it did not have
enough information ̶
that should have been enough
for the plaintiff to take legal action to force the recalcitrant
first defendant to make a full
disclosure of what was going on
especially any underlying agreement that was in place at the time.
This could have been in
addition to interdicting the process if it
chose to do so as the plaintiff’s attitude was that what was
going on was not
a proper section 41 process.
[17]
I do not understand why the attempts to engage the first defendant
had to be numerous while the negative impact on its profits
was
manifest and the first defendant was at the same time not playing
open cards with the plaintiff or appeared to be unwilling
to do so as
it alleged. While it is plausible that the
plaintiff might not have been aware of the content of
any agreement
between the first and second defendants either in September 2017 when
the said agreement was concluded or May 2018
when it felt the impact
on its income as a result of the introduction of the starter bus
service, it had enough to demand reasons
for the operation of the
starter bus service. The plaintiff could have used anyone of
the many mechanisms provided for in
the legal framework including
section 5 of PAJA to demand to be furnished with reasons and any
underlying agreement for the starter
bus service. Section 5 (1)
of PAJA reads:
“
Any
person whose rights have been materially and advisedly affected by
administrative action and who has not been given reasons
for the
action may, within 90 days after the date on which that person became
aware of the action or might reasonably have been
expected to have
become aware of the action, request that the administrator concerned
furnish written reasons for the action.”
[18]
Even if the plaintiff felt that it did not, at that stage, have
enough information for this action, it clearly had enough to
insist,
through legal action if necessary, on being furnished with the
reasons and the underlying agreement. It did not.
On the
evidence of Mr Brink the plaintiff at some stage in 2018 felt a
reduction in passengers in the Northern areas including
the Cleary
Park route. They, as directors of the plaintiff, raised a huge
concern and instructed their lawyers to write letters
on a continuous
basis asking for more information and at some stage sent invoices for
loss of income due to the starter bus service
operation in line with
an undertaking for compensation which had been made in March 2018.
Even on the basis of this
evidence it is not clear why no
legal process was embarked upon to force the first defendant to place
them in possession of any
relevant documents because, at least on the
plaintiff’s contentions, the starter bus service was an illegal
operation.
This could easily have included an interdict
stopping the illegal operation to arrest the loss of income which was
already evident.
[19]
Mr Brink testified that in October 2018 the plaintiff was furnished
with a copy of the VOCA annexed to the particulars of claim
as
“POC3”. This document was handed to Mr Brink’s
fellow director, Mr Duze by Mr Gaushe who, on Mr Brink’s
evidence, was intimately involved with the starter bus service
project as an official of the first defendant. Even though
“POC3” was not signed by the other contracting party, it
did place the plaintiff in an even better position of knowing
who the
other contracting party was and what were the terms of the
agreement. I am of the view that in order to interdict
an
unlawful conduct like the operation of the starter bus service the
plaintiff did not need to be in possession of that agreement
especially because it believed the said operation to be illegal and
in contravention of section 41.
[20]
The requirements imposed by section 7 (1) (
b
) are three fold.
The first one is that the person concerned must have been informed of
the administrative action or somehow
become aware of it. The
second, which is linked to the first one is that of awareness of the
reasons for the administrative
action or a position in which it
reasonably, might have been expected to have become aware of the
action and the reasons for it.
Whatever else happened before
October 2018 at the very least ̶ and a lot did
happen during that period which ought
to have spurred the plaintiff
into meaningful action, the receipt of “POC3” by the
plaintiff in October 2018 should
have given the plaintiff even more
information than the minimum it needed and caused it to act more
decisively. Therefore,
nothing prevented it from immediately
approaching this Court. I agree with the first defendant’s
contention that rule
53 was just one of the many legal processes that
were easily at the plaintiff’s disposal if it wanted to act
without unreasonable
delay.
[21]
When asked under cross examination about the specific time when the
plaintiff became aware that the starter bus service was
in fact
operating, Mr Brink became less than clear, at times merely referring
to sometime in 2018 and not being more specific.
This is
strange in light of the consequentially amended replication which
clearly states that in May 2018 the plaintiff became
aware that a
starter bus service was operating and impacting on its income
generating capacity because it was overlapping on the
Cleary Park
route. I do not think that it should have been difficult for
the plaintiff’s witness to be more exact and
its difficulty in
that regard is incomprehensible. This is more so that the
impact of what they considered to be an illegal
operation was acted
upon with invoices being issued. Issuing invoices was a choice
made, I would assume, carefully, regardless
of the fact that it could
lead to the prescribed timelines for the institution of review
proceedings being at the risk of not being
observed. This is
also irreconcilable with some of Mr Brink’s evidence at some
point during cross examination in which
he testified that in November
2018, December 2018 and January 2019 the starter bus service “
was
already implemented, it was running for six months when the MOA was
done
”.
[22]
In October 2018 the plaintiff was placed in possession of POC3 which
contained details of the agreement on the basis of which
the starter
bus service was being operated. Still no legal action was
instituted but the plaintiff continued with the engagements
despite
not being paid even after having presented some invoices for loss of
income. These invoices were presented inordinately
even though
they were not being paid until July 2019. It is not clear to me
why from October 2018 legal action was still
not instituted until
about 10 months later in July 2019 when summons was issued. The
plaintiff, which was, throughout, represented
by attorneys, could not
have been oblivious to the time limits prescribed in section 7(1) to
institute review proceedings within
180 days. It is difficult
to avoid the conclusion that the plaintiff was at the very least
prepared to allow the starter
bus service to continue if it was being
compensated for its loss of income. This is very concerning and
not in line the plaintiff’s
belief that the starter bus service
did not comply with the legal prescripts especially section 41 and/or
the procurement processes
provided for in section 217 of the
Constitution and was therefore tainted with illegality.
[23]
At the very latest, the plaintiff would have become fully aware of
everything they needed to know in October 2018, when POC3
was handed
to Mr Duze by Mr Gaushe. I pause now to point out that even
that is being generous to the plaintiff because on
the objective
analysis of its own evidence, it reasonably ought to have become
aware that there was an agreement on the basis of
which the second
and/or third and fourth defendants were allowed to operate on its
routes and impacting on its income even long
before October 2018.
After all, on Mr Brink’s evidence, there were good relations
between Mr Duze and Mr Gaushe.
If the relations were as
good as to make it possible for Mr Gaushe to give the agreement to Mr
Duze, I simply do not understand
that Mr Gaushe would have been
reticent about what was going on. This is besides legal action
that could have been taken
not only to stop the illegal conduct as
soon as the buses started operating but also to get more information
about what was happening
to the extent that the plaintiff believed
that it needed more information. The only reason they took
almost a year to institute
legal proceedings from October 2018, it
seems to me, was not because they were looking for a signed document
but must have been
because they were prepared to allow the starter
bus service to continue if they were compensated. This is
irreconcilable
with the plaintiff’s stated position that the
VOCA or POC3 should be reviewed and set aside on the basis of
illegality.
[24]
The plaintiff’s own evidence shows that the plaintiff had, for
a significant period of time, been aware of the first
defendant’s
intentions about starting a process that was intended to culminate in
a section 41 process. Mr Brink’s
evidence was that the
plaintiff even participated and/or assisted the first defendant
because of its vast experience and resources
in the transport
sector. It is so that they wrote numerous letters, through
their lawyers and also held numerous meetings
in which the issue of
the integrated transport service was raised or would have been
discussed and including the starter bus service
that was to be
introduced. They had throughout maintained that what the first
defendant was doing was not a proper section
41 process to which they
were entitled to be involved. Mr Brink’s evidence was
that they had reservations in being
involved in the starter bus
service on the basis that section 41 allows only one opportunity to
participate in negotiations. The
plaintiff feared that if it
participated in the negotiations about the starter bus service they
might jeopardise their participation
in an all-inclusive section 41
process in the future. This, in my view, is all the more reason
why the plaintiff should have
interdicted the process since it
considered it to be an illegal operation. Its explanation that
it did not do so because
of the fear of damage to its buses or
endangering the lives of passengers is clearly an afterthought to
explain its failure to
take legal action not later than 180 days.
It is not without significance that even in these proceedings one of
the prayers
the plaintiff seeks is to interdict the operation of the
starter bus service. This begs the question, will its buses and
passengers be safe if the interdict were to be granted and if so
why? This is not explained or dealt with by the plaintiff.
[25]
As far back as March 2018 there appears to have been an undertaking
for compensation of the plaintiff’s losses should
it be deemed
and agreed that compensation was due to the plaintiff. On the
basis of such an undertaking, which was itself
made subject to an
agreement that compensation was due to the plaintiff it elected not
to interdict the starter bus service. The
undertaking was not
in the form of an agreement signed by both parties. It was
contained in a letter with no clear terms
or criteria for the
determination of when compensation would be due and a clear legal
basis and computation of such compensation.
It is worrisome
that the plaintiff, as a corporate citizen, was clearly prepared to
allow and acquiesce to what they deemed to
be an illegal process to
continue if compensation was paid to them if its evidence relating to
the undertaking is anything to go
by. I am of the view that no
valid undertaking could be made on the strength of an illegal starter
bus service based on an
allegedly unlawful agreement, the VOCA.
[26]
There was also evidence of a legal opinion having been sought and
obtained from advocate Pienaar SC by the first defendant
about
whether or not the introduction of the starter bus service complied
with section 41 of the Act. If there ever was a
time during
which the plaintiff had some uncertainty about the correctness of its
understanding of section 41 and the alleged unlawfulness
of the
starter bus service that the first defendant had commenced with, the
opinion of advocate Pienaar SC must have cleared that
uncertainty.
The plaintiff accepted that opinion which was in any event
along the same lines as its own view that the starter
bus service
could not be done outside of section 41 of the Act or used to
circumvent the Act. The plaintiff must have received
that
opinion at the latest in July or August 2018 from the first
defendant. The plaintiff still did not interdict the unlawful
process and elected to continue writing letters to the plaintiff,
through its attorneys and engaging with the first defendant while
the
second defendant’s buses continued to operate. Those
engagements included an exchange of MOAs the last of which
was in
September 2018. The first defendant never showed any tangible
commitment to those engagements.
[27]
It is worth noting that one of the main reasons given by the
plaintiff for not instituting the action before October 2018 was
because it did not have the contract. Therefore, it did not
have the information contained therein, the terms thereof including
the identity of the other party to the contract. It is
difficult to understand why the plaintiff did not institute the
action
soon after being placed in possession of the contract by Mr
Gaushe. Even after getting the contract the plaintiff delayed
for almost a year from October 2018 when it received a copy of the
contract to the 22 July 2019 when it eventually issued the summons.
This delay has not been fully and sufficiently explained. The
plaintiff has not cogently explained why from October 2018
no legal
action of whatever nature or form was instituted for about nine
months until July 2019 beyond the endless engagements
in meetings and
writing of letters.
[28]
All this delay happened in circumstances in which the plaintiff’s
erstwhile attorneys were involved in assisting the
plaintiff and did
provide legal advice and support. It is therefore safe to
conclude that both the plaintiff and its attorneys
did not act
promptly and timeously for some other reasons. The requirements
in section 7 (1) (
b
) of PAJA are that the application for the
review of the administrative action must be instituted, in the first
instance without
unreasonable delay, and in any event not later than
180 days from the date of being aware of the administrative action
and the
reasons therefor. It is also concerning that the
plaintiff’s attorneys at the time, agreed to act for it while
they
were also in the first defendant’s panel of attorneys and
were also involved in the issue of the integrated public transport
service on behalf of the first defendant. In that way they were
advising both the plaintiff and the first defendant on that
issue
despite their divergent views on the implementation of section 41.
However, the plaintiff has stayed clear of even
alluding to this as
having contributed or played a role in how the prescribed time limits
in PAJA were not observed. This
also possibly explains this
unquenchable desire for an amicable resolution of the issues which Mr
Brink alluded to in his testimony.
Whether this is the
case or not remains unclear but it is a concern at least from the
ethical point of view.
[29]
In
Kirkland
Investments
[1]
Cameron J expressed the following sentiments about the state which
are, in my view, apposite herein in relevant respects.
He said:
“…
PAJA requires that
the government respondents should have applied to set aside the
approval, by way of formal counter-application.
They must do
the same even if PAJA does not apply. To demand this of
government is not to stymie it by forcing upon it a
senseless
formality. It is to insist on due process, from which there is
no reason to exempt government. On the contrary,
there is a
higher duty on the state to respect the law, to fulfil procedural
requirements and to tread respectfully when dealing
with rights.
Government is not an indigent or bewildered litigant, adrift on a sea
of litigious uncertainty, to whom the
courts must extend a
procedure-circumventing lifeline. It is the Constitution’s
primary agent. It must do right
and it must do it properly.
Counsel for the department told this
court, as he told the Supreme Court of Appeal, that, if the
department had to bring a counter-application
under PAJA, it would
face the 180-day rule. Well, precisely. An explanation
for the delay is a strong reason for requiring
a counter
application. But, even outside PAJA, the position is the same.
This court recently confirmed in
Khumalo
that litigants,
including public functionaries, are bound by statutory and common-law
time limits and may not circumvent them using
procedural tricks.
The same is true here.”
[30]
If the rule of law is to be restored and maintained in this country
all citizen including corporate citizens like the plaintiff
cannot
turn a blind eye to an illegality while they pursue their financial
interests. This is more so if in the process of
pursuing
financial interests or even an amicable resolution of the dispute,
they allow the time limits prescribed in legislation
such as PAJA to
elapse. The higher duty on the state to which Cameron J
referred to in
Kirkland
to respect the law and to fulfil
procedural requirements is, in my view, equally applicable to
corporate citizens. They are
not in the same position as
ordinary citizens most of whom might not afford legal services.
Corporate citizens have a duty
higher in my view than that of
ordinary citizens for the simple reason that compliance with the
legal and regulatory framework
is in their business interests.
They generally have the wherewithal including the legal and financial
resources to ensure
that they comply with the legal framework in
which their businesses operate. They are in a position akin to
that of government.
They are not “
indigent or
bewildered litigants, adrift on a sea of litigious uncertainty, to
whom courts must extend a procedure-circumventing
lifeline
.”
Mr Brink testified that the plaintiff operates about 400 buses.
It is clearly not a small player in the transport
sector and has
been, on Mr Brink’s evidence, in operation for more than a
century. Mr Brink should agree with this
assessment. Part
of his evidence was that “
if something does not sit within
the NLTA – we are a bus company for more than 100 years, we
operate strictly within the boundaries
of legislation
.”
[31]
I am by no means suggesting that the requirements to comply with
prescribed time limits should be lesser for ordinary citizens
some of
whom may be poor. I am merely stating the obvious, which is
that for corporate citizens compliance with the law is
their life
sustaining blood and for them it should be easier than for most South
Africans. The plaintiff could and should
have given a better
and fuller explanation instead of relying on endless engagements that
did not go anywhere. This is more
so that the invoices were not
being paid, the MOAs which had been exchanged in the engagements were
not being concluded despite
numerous attempts by the plaintiff to
conclude the matter.
[32]
Part of the plaintiff’s case is that because of the undertaking
for compensation, the plaintiff did not take legal action
in the face
of what they considered to be an illegal operation in the form of the
starter bus service which operated in contravention
of the provisions
of section 41. It is clear that the attempt to get compensation
played a huge role in causing the plaintiff
not to institute these
proceedings timeously and in any event within the 180-day period
provided for in PAJA. It must be
remembered that the main
reason for this action is the recovery of damages allegedly suffered
by the plaintiff because of the introduction
of the second
defendant’s buses in terms of the VOCA. Undertakings of
compensation cannot excuse the plaintiff from
basically turning a
blind eye as it seems to have done, to procedural irregularities or
illegalities that it was aware of.
[33]
This kind of conduct could easily undermine the constitutional
framework and the rule of law that the plaintiff claims to be
upholding by seeking to set aside the VOCA. It also shows that
the plaintiff was not interested in procedural rectitude and
observance of the legal prescripts but it superimposed its short-term
benefits of getting compensation over legal requirements.
I
have serious reservations about the legal basis for the payment of
the invoices which the plaintiff presented. It is troubling,
to
say the least, that had the first defendant paid those invoices, it
would essentially have paid both the plaintiff and the second
defendant for duplicated services in a manner that would have been
simply absurd. I feel that such payment would have been
in
exchange for the plaintiff not interdicting what they deemed to be an
illegal process. It might even have been in exchange
for the
unlawful introduction of the second defendant’s buses or taxis,
if the plaintiff’s contention that they ought
not to have been
allowed on the road is to be accepted in the circumstances especially
outside the section 41 framework.
I therefore conclude that the
plaintiff unreasonably delayed in instituting this action.
[34]
The plaintiff contends that if it is found that it delayed
unreasonably in instituting this action for review, such delay should
be condoned in terms of section 9 of PAJA in the interests of
justice. It also seeks an order that the 180-day period be
extended in terms of section 9 from October 2018, alternatively from
May 2018, alternatively from March 2018 to one day after the
date of
service of the summons commencing action. The plaintiff has not
explained, pleaded nor given evidence of what the
interests of
justice are in its view which will be served by the extension of the
180-day period. There is also no explanation
of what interests
of justice would be negatively affected if the period is not extended
beyond it suffering financial losses.
It is so that section 9
imposes a condition for the extension of the 180-day period.
That condition is that the interests
of justice must require that the
period be extended. The plaintiff has not shown how the
interests of justice, whatever they
are, require an extension.
A litigant may not just apply for the extension without frontally
dealing with how it will be
in the interests of justice to do so and
expect the court to make up its mind about that.
[35]
The plaintiff’s conduct as gleaned from its pleaded case and
evidence is in some ways, clearly not about the validity
or otherwise
of the first defendant’s implementation of section 41 or
non-compliance therewith. This is also shown
by the fact that
at some stage it was prepared to allow the non-compliance complained
of if it was paid compensation. In
other words, it was prepared
to turn a blind eye to what it now calls a violation of the
constitutional principle of legality if
it was indemnified against
losses as a result thereof. This is troubling because the
Constitution is very clear that law
or conduct in violation of the
Constitution is invalid. This cannot and should not be
countenanced as it makes the constitutional
principle of legality
subject to financial considerations such as compensation. That
must surely also mean, in context, that
the compensation which was
promised or undertaken to be paid by the first defendant in its
letter dated 23 March 2018 would also
have been invalid. It
would also mean that it is possible to sacrifice the fundamental
principle of legality in lieu of payment
be it in the form of
compensation or for some other reason. This is besides the fact
that payment of the said compensation
would have been prejudicial to
the rate payers of the first defendant who would be paying fees and
subsidies to both the plaintiff
and the second and/or third and
fourth defendants. This approach to constitutionalism in general and
to the principle of legality
in particular would, in my view, wreak
havoc to our nascent democratic fibre were it to be countenanced.
I am of the view
that financial interests cannot be allowed to lead
to nor should they be used to justify non-compliance with the law
unless there
is a sound legal basis for doing so.
[36]
The other issue that the plaintiff raised in its pleadings is the
facilitative role that Mr De Villiers, the erstwhile attorney
of the
plaintiff played on the overlapping of routes and other issues.
The question of whether or not section 41 was complied
with is not
and was not related to or even interlinked with whether or not routes
overlapped in my view. The overlapping
of routes could be
related to compensation. In fact, it was for the reason of the
possibly overlapping routes that the question
of compensation arose.
The issue before me at least at this stage is not whether or not the
plaintiff is entitled to compensation,
but whether or not the 180-day
period provided for in section 7 of PAJA should be extended in terms
of section 9. If the
period is extended the next question is
whether POC3 or VOCA should be declared invalid. Again the
latter question is unrelated
to whether or not compensation is due to
the plaintiff but whether or not in concluding and implementing the
VOCA section 41 was
complied with. If I am correct in this
analysis, it follows that the overlapping of routes and the
discussions related thereto
and the time it might have taken to seek
agreement about those issues cannot possibly be used to explain the
delay and therefore
to make a case for condonation and the extension
of the 180-day period. It has not been explained why all those
engagements
including the facilitative role of Mr De Villiers could
not have been embarked upon but still observe the 180-day period.
[37]
I do think that to an extent the plaintiff might have misconstrued
the relevant case it needed to make and pleaded its case
and gave
some of its evidence as if had compensation been paid it could
justifiably have been entitled to delay in instituting
the review
proceedings. Alternatively, it would have been correct to allow
the starter bus service to continue and not challenge
its legality or
compliance with section 41 as long as the first defendant continued
paying its invoices so that what it considered
to be an unlawful
process would continue. This puts into doubt the plaintiff’s
fidelity to the rule of law. Unlawful
conduct is just that,
unlawful conduct and therefore unconstitutional. Parties may
not agree to pay compensation to one another
and on that basis a
crucial decision is not sought to be reviewed and set aside
timeously. Therefore, contrary to what the
plaintiff seeks to
do by asking this Court to extend the 180-day period in the interest
of justice, I am of the view that it would
not be in the interest of
justice to extend the period where legislation such as PAJA was
ignored while the plaintiff pursued its
financial compensation.
If it is indeed so that section 41 was not complied with as plaintiff
contends and the plaintiff
allowed the timelines prescribed in PAJA
to elapse hoping to be paid compensation, it clearly was prepared to
accept the contravention
of section 41 as long as it was paid.
I fail to see how, among other considerations, in those
circumstances, it could correctly
be said that the extension of the
180-day period is in the interests of justice. Financial
interests do not equate to interests
of justice without more where,
on the facts of this case, compliance with legislation was basically
ignored.
[38]
The plaintiff’s case as pleaded is not without other
difficulties in relation to the merits, even if it was so that
section 41 had been contravened. In its particulars of claim
the plaintiff in part, pleads as follows:
“
38. By
virtue of the first defendant’s failure to comply with the
provisions of the Act and in breach of the principle of
legality by
authorising the Second Defendant to operate outside the confines of
the Act (and to unlawfully and in breach of the
principle of legality
subsidize the third and fourth defendants) the plaintiff has suffered
damages in that it has lost passengers
over the affected routes.
39. Such loss of passengers is
directly caused by the unlawful actions on the part of the first,
second, third and fourth defendants
by virtue of the transport of
passengers by the second defendant over the Clearly Park CBD /
Booysens Park / CBD / routes and by
the third and fourth defendants
to and from the pick-up locations on the affected routes. The
transport of passengers by
the third and fourth defendants overlap
the affected routes.
40. By virtue of the diminution in
passengers on the affected routes, the plaintiff has sustained losses
in revenue in respect of
fees payable for the services rendered in
terms of Interim Contract Number IC67/97 as amplified by the latest
addendum, Addendum
11.”
[39]
There is no clearly pleaded basis for the damages claimed. The
plaintiff’s case is not based on contract or breach
thereof nor
is it alleged that there was some non-compliance with IC67/97 leading
to the loss claimed. The claim is also
not based on some form
of negligence on the part of the first defendant or the duty of care
allegedly owed to it that was breached.
None of that is
pleaded. The damages claimed are also not based on any of the
provisions of PAJA. It was contended
on behalf of the first
defendant that while section 41 of the Act is the section the
plaintiff alleges the first defendant breached,
section 41 does not
contemplate a claim for compensation for damages in the event of a
breach thereof. It has not been pleaded
nor was it contended
that that section 41 envisages compensation in the event that it is
not complied with. In fact, even
a reading of section 41 does
not lend itself to such interpretation.
[40]
Section 41 reads:
“
(1)
Contracting authorities may enter into negotiated contracts with
operators in their areas, once only, with a view to –
(
a
) integrating services
forming part of integrated public transport networks in terms of
their integrated transport plans;
(
b
) promoting the economic
empowerment of small business or persons previously disadvantaged by
unfair discrimination; or
(
c
) facilitating the
restructuring of a parastatal or municipal transport operator to
discourage monopolies.
(2) The negotiations envisaged by
subsections (1) and (2) must where appropriate include operators in
the area subject to interim
contracts, subsidised service contracts,
commercial service contracts, existing negotiated contracts and
operators of unscheduled
services and non-contracted services.
(3) A negotiated contract contemplated
in subsection (1) or (2) shall be for a period of not longer than 12
years.
(4) The contracts contemplated in
subsection (1) shall not preclude a contracting authority from
inviting tenders for services forming
part of the relevant network.
(5) Contracting authorities must take
appropriate steps on a timeous basis before expiry of such negotiated
contract to ensure that
the services are put out to tender in terms
of section 42 in such a way as to ensure unbroken service delivery to
passengers.”
[41]
I do not understand any of these provisions to envisage a possible
claim for damages in the event of the breach of any of its
provisions. Besides the broad reference to section 41 and the
alleged non-compliance therewith it is difficult to understand
the
basis for the claim. A breach of a legislative provision does
not, in my view, without more, result in a claim for compensation
in
the event of a breach. The plaintiff’s claim for damages
is at best speculative with no clear legal basis.
This speaks
to the prospects of success which are part of the overall
consideration of whether an unreasonable delay should be
condoned.
[42]
In
Aurecon
[2]
the Constitutional Court stated the relevant legal principles as
follows:
“
Nonetheless,
due regard must also be given to the importance of the issue that is
raised and the prospects of success. In
this case that means
that considering the significance of the alleged procedural
irregularities that were raised in the Ernst &
Young report.
It should be borne in mind that, when carrying out a legal evaluation
a court must, where appropriate, ‘take
into account the
materiality of any deviance from legal requirements, by linking the
question of compliance to the purpose of the
provision’.
The SCA held that the procedural
irregularities as alleged were not in fact irregularities at all and,
before this court, the City
did little to assuage that finding.
If the irregularities raised in the report had unearthed
manifestations of corruption,
collusion or fraud in the tender
process, this court might look less askance in condoning the delay.
The interests of clean
governance would require judicial
intervention. However, this is not such a case and a weighing
of factors leans decidedly
against granting condonation.”
[43]
The plaintiff’s supine approach has not been sufficiently
explained and that militates against the granting of condonation
if
regard is had to the first defendant’s argument that the
plaintiff waited until the agreement had run half its course
before
instituting these proceedings. The agreement has now run its
full course and has expired by effluxion of time.
It is not in
dispute that over the period the second defendant and other relevant
parties have been paid based on the agreement.
If the delay is
condoned and the agreement is declared unlawful, it follows that all
payments made consequent thereto will also
become unlawful. The
plaintiff has not dealt with this eventuality. All of this
could have been avoided by the plaintiff
acting promptly and not
allowing what it considered to be unlawful conduct to continue in the
hope of claiming compensation that
would have accumulated over the
period. Precisely because of this, whilst the second defendant
and/or the third and fourth
defendants have been paid, the plaintiff
also seeks to be paid for what it calls the duplicated routes and the
loss of income attendant
thereto.
[44]
What the plaintiff seems to be suggesting is that because the first
defendant breached the provisions of section 41 it is entitled
to be
paid compensation for damages in the form of loss of income. I
do not understand section 41 to be capable of an interpretation
that
on its mere breach any damages that might have been suffered as a
result of such breach are recoverable from the transport
authority
such as the first defendant. This is besides the fact that the
legal basis on which such liability should be imposed
in the event of
it being found that the first defendant did not comply with section
41, seems to be bereft of any legal basis.
This casts further
doubt as to the prospects of success in my view and as such weakens
the plaintiff’s case on condonation
quite significantly.
[45]
In
Odinfin
[3]
the court said:
“
The
fact that PAJA does not afford a delictual remedy for damages does
not necessarily mean that unjust administrative action will
not be
delictually wrongful if there was a breach of the statute pursuant to
which the administrative action was taken and if such
statute on a
proper interpretation confers a delictual remedy. In the
instant matter, however, Reynecke does not allege that
there was a
breach of the FAIS Act. And even if there had been a breach of
s 14 of the FAIS Act, I do not consider that the
FAIS Act envisages a
delictual claim for damages. The primary aim of s 14 is not to
protect the interests of employed representatives
such as Reynecke
but to advance the public good. Odinfin had no option but to
debar Reynecke once it found him lacking honesty
and integrity.
The imposition of liability for damages would have a ‘chilling
effect’ on the performance by FSPs
of their statutory duty
imposed by s 14 and on the administration of the FAIS Act.
There is no difficulty in imposing liability
where the decision-maker
acts dishonestly or corruptly but our courts have been show to find
that statutes accord delictual remedies
for mere negligence.
Here Reynecke wanted the court a quo to go even further and impose
strict liability.”
[46]
I am not satisfied with the plaintiff’s explanation for the
failure to institute the review proceedings without unreasonable
delay and not later than within 180 days. The prospects of
success in claiming damages against the first defendant also militate
against the condonation of the delay. The broader interests of
justice in declaring invalid a contract that was allowed to
run its
full course without the prompt and appropriate action being taken do
not, in my view support the plaintiff’s case
that it would be
in the interest of justice to condone the unreasonable delay.
In fact, doing so would, in my view, possibly
undermine the
provisions and purpose of section 7 and could lead to the abuse of
section 9 of PAJA. Therefore, the plaintiff’s
condonation
application must fail.
[47]
In terms of the separation order the separated issue of the
plaintiff’s entitlement to an order declaring unlawful, invalid
and setting aside the VOCA (POC3 to the particulars of claim) was to
be dealt with. However, I see no point in doing so in
circumstances where this matter has, for all intents and purposes,
been disposed of on the issue of condonation in light of this
Court’s
finding that the plaintiff unreasonably delayed and therefore did not
comply with section 7(1)(
b
)
of PAJA. I have also found that the plaintiff has not made out
a proper case for condonation of its unreasonable delay in
terms of
section 9 of PAJA and the extension of the180-day period. I am
fortified in this view by the approach adopted by
the court in
Aurecon
[4]
where Mbha AJ, writing for the full court expressed himself as
follows:
“
Given
that this matter is disposed of on the basis that the City was out of
time and failed to make out a proper case for condonation
in terms of
s 9 of PAJA, it is not necessary to venture into the arguable point
of law raised, namely the prior involvement of
a prospective
tenderer. Although the applicant and CESA implored this court
to pronounce on the proper meaning of ‘involved
with’ as
contained in reg 27 (4) of the SCM Regulations and clause 95 of the
SCMP, the general principle as set out by this
court in
National
Coalition
is that this court does not pronounce on issues which are moot (which
essentially would equate to providing an advisory opinion).
The
question of ‘involved with’ becomes moot by virtue of the
fact that the City failed to make a case for condonation.”
[48]
By party of reasoning, this matter having been disposed of on the
issue of condonation, I see no reason why I should go beyond
it and
look into whether or not the first defendant has complied with
section 41 of the Act in entering into and implementing the
agreement
with the second defendant. To the extent that the first
defendant might have failed to comply with section 41 I
do not think
that their non-compliance would have been so egregious such that it
must be set aside even though the agreement has
run its course.
On the contrary, it might very well be that at worst the first
defendant went about the wrong way in addressing
the purposes of
section 41 alluded to in subsection 1 (
b
) of the Act.
Subsection 1 (
b
) provides that “[
c]ontracting
authorities may enter into negotiated contracts with operators in
their areas, once only, with a view to ̶
promoting
the economic empowerment of small business or of persons previously
disadvantaged by unfair discrimination… .
”
[49]
Whatever reasons the first defendant had in acting in the manner it
did it was certainly not motivated by dishonesty or worse,
corruption. In those circumstances it might have been necessary
to declare invalid the expired contract even if it would
mean
invalidating payments made consequent thereto. I might add that
in those circumstances it might have been necessary
to approach and
decide the matter differently. In his evidence, Mr Brink
testified that his opinion was that “
the Municipality was
looking for a system to formalise the informal taxi industry into an
organised entity that they can negotiate
with once we enter the s 41
of the NLTA
”. That does sound like a noble basis for
what might very well prove to be a misguided implementation of
section 41.
[50]
I am by no means suggesting that the first defendant complied with
the Act. I have declined to decide that issue.
I am
commenting as I do, if only to point out that not in all cases where
it will be imperative that once raised, an issue of legislative
non-compliance must be dealt with. The facts of each matter and
in particular, the motivation for and the effect of non-compliance,
more particularly to the affected parties including whether or not
such non-compliance was of such an egregious nature that it
must be
dealt with at all costs must also be considered. Considerations
of whether the contract is still in force and has
not expired by
effluxion of time are also important in the judicious exercise of the
court’s discretion. All those
issues and others that may
be relevant are part of what the court may consider and even declare
invalid and set aside a contract
even if it has run its course in the
interests of justice. This is not such a case. Going
forward, the first defendant
would do well to seriously consider
whether indeed it complied with section 41 in light of the fact that
the VOCA (annexure “POC3”
to the particulars of claim and
annexure “A” to the consequentially amended plea) has in
any event expired by effluxion
of time. As Cameron J observed
in
Kirkland
it is after all, the Constitution’s primary
agent and therefore it must be careful like all organs of state to
ensure that
it applies legislation correctly. In the result,
the plaintiff’s action must fail.
[51]
The following order will issue:
1. The plaintiff’s
application for condonation of its non-compliance with section 7(1)
of PAJA is dismissed.
2. The
plaintiff’s action is dismissed with costs including costs of
two counsel where so employed.
_____________________
M.S.
JOLWANA
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
for the plaintiff: A. BEYLEVELD SC
Instructed
by: WHEELDON RUSHMERE & COLE INC.
GRAHAMSTOWN
Counsel
for the defendant: O.H. RONAASEN SC with L.N. NTSEPE
Instructed
by: MACI INCORPORATED c/o MQEKE ATTORNEYS
GRAHAMSTOWN
Date
heard
: 29 October 2021
Delivered
on
: 15 February 2022
[1]
MEC for Health Eastern Cape and Another v
Kirkland Investments (Pty) Ltd t/a EYE & Lazer Institute
2014
(3) SA 481
(CC) para 82-83.
[2]
Cape Town City v Aurecon SA (Pty) Ltd
2017 (4) SA
223
(CC) at 240 paras 49-50
[3]
Odinfin v Reynecke
2018
(1) SA 153
(SCA) at 160 para 21.
[4]
Aurecan
(note 2
above) at paragraph 54.