About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2011
>>
[2011] ZASCA 202
|
|
Chairman of the State Tender Board v Digital Voice Processing (Pty) Ltd, Chairman of the State Tender Board v Sneller Digital (Pty) Ltd and Others (764/2010) [2011] ZASCA 202; 2012 (2) SA 16 (SCA); [2012] 2 All SA 111 (SCA) (24 November 2011)
Links to summary
THE SUPREME COURT OF APPEAL OF
SOUTH AFRICA
JUDGMENT
Case No: 764/2010
(NGHC Case Nos:57294/07: 33921/07)
CHAIRMAN OF THE STATE TENDER BOARD
….....................................
Appellant
and
DIGITAL VOICE PROCESSING (PTY) LTD
….......................................
Respondent
AND
THE CHAIRMAN OF THE STATE TENDER BOARD
…............................
Appellant
and
SNELLER DIGITAL (PTY) LTD
….................................................
First
Respondent
LINDA BEATRICE VAN DEN HEEVER
…...............................
Second Respondent
HAROON ISMAIL ANGLIA
….......................................................
Third
Respondent
YONANDE JOUBERT
…............................................................
Fourth
Respondent
BUSI MURIEL NYEMBEZI
….........................................................
Fifth
Respondent
VERONIQUE ANN SEPTEMBER
….............................................
Sixth
Respondent
Neutral citation:
Chairman,
State Tender Board v Digital Voice Processing (Pty) Ltd; Chairman,
State Tender Board v Sneller Digital (Pty) Ltd
(764/2010)
[2011]
ZASCA 202
(24 November 2011)
Coram:
Navsa, Lewis, Bosielo
and Seriti JJA and Plasket AJA
Heard:
10 November 2011
Delivered:
24 November 2011
Summary:
Administrative law –
Promotion of Administrative Justice Act 3 of 2000
– ripeness of
application to review and set aside administrative action –
grounds of review – error of fact and
irrationality.
ORDER
On appeal from North Gauteng High
Court, Pretoria
(Prinsloo J sitting as court of first instance):
Both appeals are dismissed with costs.
JUDGMENT
PLASKET AJA (NAVSA, LEWIS, BOSIELO AND
SERITI JJA concurring)
[1] As will be seen from the facts set
out below, the two appeals dealt with in this judgment are related.
They were heard together,
both in the court below and before us. Both
are appeals against decisions of the North Gauteng High Court,
Pretoria (Prinsloo J)
that reviewed and set aside the blacklisting of
the respondents – the applicants in the court below –
from doing business
with the government in all of its guises for a
period of ten years. In both matters, leave to appeal to this court
was granted
by Prinsloo J. I shall refer to these cases as DVP and
Sneller Digital respectively.
The facts
[2] In late January 2000 the first
respondent in Sneller Digital submitted a tender to the State Tender
Board (the STB) for a government
contract for the recording,
transcribing and archiving of digitally recorded proceedings in the
high courts seated at Bloemfontein,
Pietermaritzburg, Port Elizabeth,
Grahamstown, Kimberley, Bhisho, Mthatha, Johannesburg, Pretoria,
Mmabatho and Thohoyandou. The
contract was awarded to it in June
2000.
[3] The contract ran its course but
was then extended beyond its final date of 31 March 2005 until a date
in 2006. There were no
complaints concerning the performance of
Sneller Digital’s contractual obligations. On 22 September
2005, however, the STB
took a decision to blacklist Sneller Digital,
its directors (who are the second to sixth respondents in this
matter), shareholders,
associated companies and their members from
doing business with the government for ten years. As the decision was
taken without
any of those affected by it having been given a hearing
of any sort, the STB capitulated meekly in the face of review
proceedings
brought as a matter of urgency.
[4] Undeterred by this setback, the
STB continued with its efforts to blacklist Sneller Digital and all
those associated with it.
As a result of complaints lodged by an
unsuccessful tenderer, investigations were conducted into the affairs
of Sneller Digital,
at the instance of the STB, by the South African
Revenue Service, the Scorpions and the Auditor-General. None of these
investigations
found evidence of any wrongdoing on the part of
Sneller Digital. The Auditor-General, for instance, made a finding
concerning the
very issues involved in this case to the effect that
‘Sneller Digital made no material misrepresentations that could
affect
the outcome of the tender award’.
[5] The renewed process that led to
the second blacklisting can be said to have commenced on 27 February
2006 when Mr Ndleleni Mathebula,
a chief director: contract
management in the national treasury, wrote a letter to Sneller
Digital through the second respondent.
In it he said:
‘
We
have observed that in your tender (tender No. RT279B/2000GE) and a
resultant contract which ended on 31 July 2005, it was indicated
that
the directors of the company Sneller Digital (Pty) Ltd were H.
Anglia, Y. Hurter, B.M. Nyembezi, V.A. September and L.B. Van
den
Heever. It has come to our attention that some or all of the above
mentioned directors were not directors as at the closing
date of the
tender, namely, on 31 January 2000 under tender No. RT279B/2000GE.
It
appears that on the 10
th
of December 1999 Earthsong
Trading (Pty) Limited which was a shelf company was registered, the
director of which was one Sheryl
Boswell. It appears that this
company was later changed on the 11
th
of February 2000 to Sneller
Digital (Pty) Ltd and on that date the above mentioned directors were
appointed.
However,
the tender document was signed on the 28
th
of January 2000 and such tender
was submitted or had to be submitted on or before the 31
st
of January 2000, it being a
closing date. If one has regard to the date of the registration of
Sneller Digital (Pty) Ltd the said
directors were appointed 11 days
after the tender documents were submitted.
You
are kindly requested to explain as to why the above mentioned
directors were alleged to have been directors of the company which
submitted the tender documents.
Further
you are requested to explain as to whether this did not amount to a
misrepresentation on the part of the tenderer.’
[6] The letter then dealt with other
issues that have no bearing on this appeal. Mathebula requested
information as to when each
of the directors of Sneller Digital was
appointed, whether each person was still a director and, if not, when
he or she ceased
being a director and the reason therefor, and
whether all of the directors were ‘actively involved in the
affairs of the
company concerned’ and, if so, what role they
had played.
[7] This letter was answered by the
attorney acting for Sneller Digital on 10 March 2006. The response,
to the extent relevant to
these proceedings, was this:
‘
1.
Messrs Anglia, Hurter (now Joubert), Nyembezi, September and van den
Heever were appointed as directors of Sneller Digital (Pty)
Limited
on 20 January 2000. In terms of Company Law, the date of appointment
of a director is the date that the shareholders resolve
to appoint
the directors. This occurred on 20 January 2000. In terms of section
216 of the Companies Act, a director, within 28
days after the date
of his appointment, must submit a consent document to the company
with details of the directors’ particulars
and, within 14 days
after the receipt of such particulars, the company must lodge a
return with the Registrar of Companies. The
fact that the return was
lodged with the Registrar of Companies after 20 January 2000 is
consistent with the procedures which are
required to be followed in
terms of the Companies Act.
2.
As is recorded in the tender document submitted to you, Sneller
Digital (Pty) Limited was a start up company initially called
Earthsong Trading (Pty) Limited. Application was made to the
Registrar of Companies to change the name on 17 January 2000. The
name change was approved in principle by the Registrar of Companies
prior to 26 January 2000 and finally registered by the Registrar
of
Companies on 25 February 2000.
3.
At the time that the tender was submitted, Messrs Anglia, Nyembezi,
September, Hurter and van den Heever were the directors of
Sneller
Digital (Pty) Limited. There was accordingly no misrepresentation.’
[8] The letter continued to state that
the duties of each of the directors had been set out in the covering
letter to the tender
and in one of its forms. Those duties had not
changed until February 2005 when, as a result of the promulgation of
the Broad-Based
Black Economic Empowerment Act 53 of 2003, a
restructuring of the Sneller Group of companies took place. As a
result of the restructuring
an empowerment rating was issued by
Empowerdex to the Sneller Group. The attorney attached the Empowerdex
reports in respect of
each company in the Sneller Group stating:
‘
You
will see from the reports attached that Messrs Anglia, Hurter,
September and van den Heever continue to be directors and
shareholders
of companies within the Sneller Group but now in a
different role. They are also all still employed in senior management
roles.
B.M. Nyembezi was appointed as a non-executive director. Her
background is set out on page 4 of the covering letter dated 26
January
2000. She was asked to become a member of the board following
her experience in facilitating empowerment.’
[9] On 15 May 2006 Mathebula wrote
back to Sneller Digital, again through the second respondent (despite
having been requested to
direct his correspondence to the attorney).
He requested a copy of the resolution in terms of which the second to
sixth respondents
were appointed as directors. On 7 June 2006, the
attorney representing Sneller Digital responded by saying:
‘
We
have already confirmed to you that the shareholders resolved to
appoint the directors on 20 January 2000. The resolution passed
by
the shareholders is private. If you need a certificate from the
company’s auditors confirming that the resolution was
duly
passed on 20 January 2000, this can be obtained.’
[10] About four months later,
Mathebula wrote yet again to the second respondent to say that he
still was not satisfied with the
responses he had received. He
continued:
‘
We
consider the issues that we have raised with you very seriously. In
the circumstances you are hereby given a further opportunity
by way
of written representations, either through your legal representatives
or yourselves, to give us reasons within 30 days of
receipt hereof,
why the State Tender Board should not restrict your company and its
directors, shareholders, associated companies
and their members from
doing business with the State for a period of 10 years.’
[11] The attorney said in a letter
dated 13 October 2006 that in the light of his comprehensive
responses to Mathebula’s concerns
in his previous letter, he
required clarification as to which of these concerns had not, in
Mathebula’s view, been adequately
addressed. He undertook to
address those within 30 days of being informed of them. Mathebula did
not revert to the attorney, despite
reminders.
[12] Eventually, on 15 June 2007,
Mathebula responded. Far from furnishing the attorney with the
information requested, Mathebula
informed him instead that a decision
had been taken. The letter reads as follows:
‘
We
refer to the above matter and to our previous correspondence in
regard thereto which include letters dated 27 February 2006,
15 May
2006 and 6 October 2006.
In
particular we record that you were given an opportunity to address
the suspected fraudulent misrepresentation and fronting that
surfaced
after the contract in tender no. RT279B/2000GE was concluded.
The
letters referred to above were addressing the issues that caused
concern to the State Tender Board. These issues included the
possibility of fraud on the part of Sneller Digital (Pty) Ltd when it
submitted its tender in January 2000 and the possibility
of fronting
with a view to claim equity ownership points so as to procure the
tender.
The
above process has taken more than a year due to the fact that the
Board regarded the issues as serious enough to warrant proper
consideration and to afford your company and its directors and
associated persons ample opportunity to address the issues before
any
decision affecting your company and the affected persons is taken.
Taking
into account all circumstances of the case and the representations on
behalf of the company and its directors the Board at
its sitting on 8
March 2007 decided as follows:
Sneller
Digital (Pty) Ltd and its Directors, partners and all associated
members who were part of Sneller Digital (Pty) Ltd at the
time of the
RT279B/2000 contract be restricted to do business with all three
spheres of government institutions for a period of
ten years;
The
decision to restrict Sneller Digital (Pty) Ltd does not impact on the
current contracts awarded to it prior to the above decision.
The
above decision was taken on the basis that you failed to remove the
suspicion of fraud at the time of submission of your tender
documents. This is so in the light of the fact that as at 30
th
January 2000 (closing date of
the tender) the directors, on whose basis the equity ownership was
claimed, were not yet appointed
as such as they were only appointed
on 11 February 2000. At all material times you were aware that this
information was incorrect
and therefore fraudulent. This did not only
constitute fraud but what is generally regarded as fronting.’
[13] When Sneller Digital was informed
of its blacklisting, the STB made no mention of the fact that Digital
Voice Processing (Pty)
Ltd (DVP), the respondent in the second
appeal, had also been blacklisted. This could not be inferred from
Mathebula’s letter
of 15 June 2007. That letter did not quote
the resolution that had been taken but only referred, in addition to
Sneller Digital,
to the ‘directors, partners and all associated
members who were part of Sneller Digital (Pty) Ltd at the time of the
RT279B/2000
contract’ as the targets of the blacklisting. DVP
did not exist when Sneller Digital tendered for and was awarded the
contract
in 2000. It only came into existence in 2001. It was,
furthermore, not linked to Sneller Digital in any way and was not
part of
the Sneller Group, even though two of its directors were also
directors of Sneller Digital.
[14] Sneller Digital launched an
application to review the decision to blacklist it. In due course its
attorneys, who were also
DVP’s attorneys, received the record
of the decision, in terms of rule 53 of the Uniform rules. It was
then discovered that
the STB had also blacklisted DVP, it being
referred to expressly in the resolution. Ms Linda van den Heever, the
second respondent
in the Sneller Digital matter and who had been a
director of both Sneller Digital and DVP, was informed of the
decision by the
attorneys acting for both companies only on 27
November 2007. On 6 December 2007, she informed Mr Steven Benson, a
director of
DVP and the deponent to its founding affidavit. The STB
had simply not bothered to inform DVP of the decision to blacklist it
for
close to nine months, despite the enormous adverse consequences
of the decision for DVP and the fact that the State Information
Technology Agency had invited DVP to bid for a valuable tender –
a tender which would not even have been considered because
of its
blacklisting. It was at this stage that DVP launched an urgent
application to review and set aside the STB’s decision
to
blacklist it.
The DVP appeal
[15] The court below found that the
decision to blacklist DVP was invalid because, being an
administrative action as defined in
s 1 of the Promotion of
Administrative Justice Act 3 of 2000 (the PAJA), it had been taken
without DVP having been afforded a hearing:
s 6(2)(c) empowers a
court to review and set aside administrative action that is
procedurally unfair.
[16] It is common cause that the STB
never afforded DVP a hearing prior to the decision to blacklist it
being taken. The only issue
that is to be decided is whether the
decision is reviewable because it had not been communicated to DVP by
the STB. The argument
advanced by the appellant is that this fact
rendered the application for the review of the decision premature. In
other words,
the issue is one of ripeness.
1
[17] Writing in 1984, when the common
law regulated the review of administrative action, Baxter said that
‘the appropriate
criterion by which the ripeness of the action
in question is to be measured is whether prejudice has already
resulted or is inevitable,
irrespective of whether the action is
complete or not’.
2
While finality is usually achieved
when an administrative decision has been made known – and from
a practical perspective,
notification to the affected party is
usually the trigger for the challenge to the decision –
notification is not necessarily
the proper indication that a decision
is ripe for challenge. This case is a good illustration why this is
so.
[18] To the extent that some of the
case law tends to suggest that, as a general principle, notification
is the touchstone for ripeness,
I am of the view that this is too
rigidly expressed. This view has its genesis in cases like
Estate
Garlick v Commissioner for Inland Revenue
,
3
which held that the judgment of
a
court
only has efficacy
once it is handed down, and stems from an era when principles
relating to judicial decision-making tended to be
applied to
administrative decision-making, often without due regard to the
differences in the nature, purpose and rationale of
these two types
of public power. The effect was to inject into administrative law a
formality that was sometimes out of place and
at odds with the
informal nature of much administrative decision-making and the fact
that, unlike judicial proceedings, administrative
‘proceedings’
often are not conducted in public – in ‘open court’.
[19] Cases like
Lek
v Estate Agents Board
,
4
relied on by the appellant, must be
understood in this light. To the extent that this case suggests as a
general principle that,
at common law, notification per se, and
nothing else, renders an administrative decision ripe for review, I
am of the view that
it overstates the position and is to that extent
wrong. In any event, the statements in
Lek
relied on by the STB concerned
territorial jurisdiction, not ripeness: Lek had in fact been notified
in writing of the decision
taken against him, the issue being where
the notification was communicated to him, and the statute under
consideration required
written notification to be given of the
decisions of the respondent.
[20] Generally speaking, whether an
administrative action is ripe for challenge depends on its impact and
not on whether the decision-maker
has formalistically notified the
affected party of the decision or even on whether the decision is a
preliminary one or the ultimate
decision in a layered process. Many
examples spring to mind but one will suffice. If, for instance, a
liquor board cancelled a
trader’s liquor licence without
informing him or her, and the police then took steps to close the
premises or seize the trader’s
stock, I have no doubt that the
decision would be ripe for challenge the moment those steps were
threatened. To suggest that the
trader is without a remedy and is
precluded from protecting his or her rights until the liquor board
has communicated the decision
to him or her only has to be stated to
be rejected. Ultimately, whether a decision is ripe for challenge is
a question of fact,
not one of dogma.
[21] Now that the review of
administrative action is dealt with in terms of the PAJA, the
position is clear. An administrative action
is defined in s 1 to be,
inter alia, a ‘decision’ which has a ‘direct,
external legal effect’. In commenting
on this aspect of the
definition of administrative action, Hoexter says:
5
‘
The
PAJA does not refer to ripeness as such. However, s 1 of the Act
appears to underscore the requirement of ripeness by confining
the
ambit of administrative action – the gateway to the Act –
as a “decision”, and moreover one with “direct”
effect. Both of these terms suggest finality.’
[22] Mathebula, in the answering
affidavit in the DVP matter, appears to suggest that DVP should still
not know of its blacklisting.
He said this of the rule 53 record
filed in the Sneller Digital review:
‘
The
record that was filed only pertains to Sneller Digital and was not
meant to inform the applicant of the decision of the 8
th
March
2007.’
[23] He did not explain why the STB
chose to keep DVP’s blacklisting secret, much less attempt to
justify this. He conceded,
however, that the decision had an effect
on DVP. There was also no suggestion on the part of the STB that the
decision was not
final or that it had not been implemented. The
adverse impact of the decision on DVP is clear. It could tender for
as many contracts
with the government as it wished and it would never
be successful – and it would not know why. In these
circumstances it
is clear to me that the decision was ripe for
challenge even if it had not been communicated to DVP by the STB
itself.
[24] In any event, even on the
appellant’s version, the decision had been communicated to DVP,
albeit vicariously. When the
rule 53 record was furnished by the
appellant’s attorneys to DVP’s attorneys, the cat was let
out of the bag. The decision
was communicated to DVP at this point,
despite the fact that the STB, for its own undisclosed reasons,
wished to keep its decision
to blacklist DVP a secret. It does not
matter, in my view, whether the notification was given personally to
DVP by the STB or not.
With the filing of the rule 53 record, the
decision entered the public domain and DVP became aware of the
decision. There is, accordingly,
no merit in the argument raised by
the appellant, even on its own terms.
[25] In the result, the appeal in the
DVP matter cannot succeed.
The Sneller Digital appeal
[26] Three issues arise in the Sneller
Digital matter. The first is whether the STB exercised a private,
contractual power to blacklist
the respondents or whether the power
was a public, statutory power the exercise of which was an
administrative action as defined
in s 1 of the PAJA and was
reviewable in terms of s 6(1). If the decision was indeed
administrative action, the second issue is
whether the decision is
tainted by irregularity and thereby liable to be set aside. The third
issue relates only to the second
to sixth respondents. The point is
taken by the appellant that their application for review is premature
because, while the decision
to blacklist Sneller Digital was
communicated to it by the STB, it never communicated the decision to
blacklist the individual
directors to them.
[27] The appellant asserts the STB
blacklisted the respondents in terms of clause 47 of the General
Conditions and Procedures (ST36)
published in the State Tender
Bulletin 1421 of 17 May 1991 which, along with the State Tender Board
regulations, made in terms
of s 13 of the State Tender Board Act 86
of 1968, were incorporated into the contract between it and Sneller
Digital that resulted
from the tender submitted by Sneller Digital on
28 January 2000. This power, the argument proceeds, is a private
power and is therefore
not subject to the constraints imposed by the
rules of public law.
[28] Interesting as that issue may be,
it is not necessary to decide it. By the time the power to blacklist
was exercised, the contract
no longer existed, having been
extinguished by the effluxion of time. The contract was entered into
in June 2000. It was to subsist
for a fixed period – until
March 2005. By agreement between the STB and Sneller Digital, it was
extended to a date in 2006.
The STB purported to blacklist the
respondents on 8 March 2007 but only informed Sneller Digital of its
decision on 15 June 2007.
By the time it took its decision,
therefore, the contract upon which it relied had run its course.
Furthermore, the contract could
not be the basis for the blacklisting
of the second to sixth respondents because they were not parties to
it.
[29] The only remaining possible
source of the STB’s power to blacklist is reg 3(5)(a) of the
regulations made in terms of
s 13 of the State Tender Board Act. This
regulation provides:
‘
If
the Board is of opinion that a person -
.
. .
(iv)
who has concluded an agreement referred to in section 4(1)(a) of the
Act, has promised, offered or given a bribe, or has acted
in respect
thereof in a fraudulent manner or in bad faith or in any other
improper manner, the Board may, in addition to any other
legal
remedies it may have, resolve that no offer from the person concerned
should be considered during such period as the Board
may stipulate.’
Regulation 3(5)(c) provides that the
same penalty may be imposed on ‘any other enterprise, or to any
partner, manager, director
or other person, who wholly or partly
exercises or exercised or may exercise control over the enterprise of
the first-mentioned
person, and with which enterprise or person the
first-mentioned person is or was in the opinion of the Board actively
associated’.
[30] It has been definitively
determined by this court in
Chairman,
State Tender Board & another v Supersonic Tours (Pty) Ltd
6
that an exercise of power in terms of
reg 3(5)(a) constitutes administrative action. Cloete JA said the
following in this respect:
7
‘
The
STB is an “organ of State” as defined in s 239 of the
Constitution, incorporated in the definitions section, s 1,
of PAJA.
The STB made a “decision relating to imposing a restriction”
as contemplated in para (d) of the definition
of “decision”
in s 1 of PAJA. The decision was an exercise of a public power in
terms of legislation, viz the regulations
quoted above, and that
requirement of “administrative action” as defined in s 1
of PAJA is accordingly fulfilled. The
decision had immediate and
direct legal consequences for Supersonic. The decision accordingly
constituted an “administrative
action” as defined in s 1
of PAJA and the provisions of PAJA are applicable. . . The rights of
Supersonic were materially
and adversely affected by the decision and
Supersonic was consequently entitled to procedural fairness in terms
of s 3(1) of PAJA.’
[31] The decision to blacklist the
respondents was clearly an administrative action in terms of the PAJA
with the result that it
is, in terms of s 6(1), susceptible to review
if any of the grounds of review specified in s 6(2) are found to be
present.
[32] It was argued on behalf of the
respondents that the decision to blacklist them was tainted by a
material error of fact or law
and that it was an unreasonable
decision on account of its irrationality. It was also argued that it
was procedurally unfair in
the sense that the STB was biased. In the
light of what is set out below, it is not necessary to determine this
last issue.
[33] As a matter of objective fact,
the second to sixth respondents were appointed as directors of
Sneller Digital on 20 January
2000, before the contract was
concluded. The STB was informed of this by the respondents’
attorney and proof, in the form
of a certificate from Sneller
Digital’s auditors, was offered to, but not requested by, the
STB. There was, at this stage,
no reason to doubt the veracity of the
information provided and the attempt, in the answering papers, to
suggest that the respondents
were lying has no factual foundation and
so does not raise a genuine dispute of fact.
[34] It is now well established in
South Africa (and in some other common law jurisdictions
8
)
that a material error of fact is a ground of review. This is so even
though it is not one of the grounds specifically listed in
s 6(2) of
the PAJA. It has been held that it falls within the ground specified
in s 6(2)(e)(iii) – the taking into account
of irrelevant
considerations and the ignoring of relevant considerations
9
–
but it may just as easily be
accommodated in s 6(2)(i), the catch-all provision that allows for
the development of new grounds of
review. This section provides that
administrative action may be reviewed and set aside on the basis of
it being ‘otherwise
unconstitutional or unlawful’.
[35] In
Pepcor
Retirement Fund & another v Financial Services Board &
another
10
Cloete JA held:
‘
In
my view, a material mistake of fact should be a basis upon which a
Court can review an administrative decision. If legislation
has
empowered a functionary to make a decision, in the public interest,
the decision should be made on the material facts which
should have
been available for the decision properly to be made. And if a
decision has been made in ignorance of facts material
to the decision
and which therefore should have been before the functionary, the
decision should (subject to what is said in para
[10] above) be
reviewable at the suit of,
inter
alios
,
the functionary who made it – even although the functionary may
have been guilty of negligence and even where a person who
is not
guilty of fraudulent conduct has benefited by the decision. The
doctrine of legality which was the basis of the decisions
in
Fedsure
,
Sarfu
and
Pharmaceutical
Manufacturers
requires
that the power conferred on a functionary to make decisions in the
public interest, should be exercised properly, ie on
the basis of the
true facts; it should not be confined to cases where the common law
would categorise the decision as
ultra
vires
.’
[36] The STB erred factually when it
concluded that the second to sixth respondents had been appointed on
11 February 2000, after
the tender had been submitted. If the STB had
taken its decision based on the proper facts it could not have
concluded that the
respondents had made fraudulent misrepresentations
to it. Its factual error was material as it was the direct cause of
the decision
to blacklist the respondents.
[37] The decision was also irrational.
The STB chose to ignore the true position in relation to when the
second to sixth respondents
were appointed as directors, and it did
so without reverting to their attorney who had offered proof in the
form of an auditor’s
certificate. A reasonable administrator,
faced with these circumstances would not have taken the decision
without first obtaining
the certificate. Instead, the STB closed its
mind to facts that disproved its suspicion that the respondents were
guilty of fraudulently
misrepresenting that the second to sixth
respondents were directors at a time when they were not.
[38] Furthermore, the STB failed to
apply its mind properly or at all to whether the conduct attributed
by it to Sneller Digital
amounted to a fraudulent misrepresentation
that induced the contract. If one accepts, for the sake of argument,
that the second
to sixth respondents only became directors on 11
February 2000, and that between 28 January and 11 February 2000 they
were not
directors, I cannot see how this could have induced the
contract that was only concluded in June 2000. By the time the
tenders
were evaluated and a decision taken, they had been directors
for some time.
[39] The STB also chose to ignore the
information it had been given about each of the directors, including
the fifth respondent
– a non-executive director – when it
decided that the respondents were guilty of ‘fronting’.
There is simply
no evidence to support this suspicion. One wonders
what would have been capable of satisfying the STB that Sneller
Digital and
is directors had done nothing wrong.
[40] In order to be rational, the
decision must be ‘based on accurate findings of fact and a
correct application of the law’.
11
That being so, no rational basis
existed for the STB’s conclusions: the administrative action
that it took was not rationally
connected to the information before
it, as required by s 6(2)(f)(ii)(cc) of the PAJA.
[41] The final argument raised by the
appellant is that, as the STB only communicated its decision to
Sneller Digital and not to
the second to sixth respondents, their
application to set aside the decision is premature. When the decision
was communicated to
the attorney acting for Sneller Digital, its
directors were obviously informed – they having instructed the
attorney –
and they discovered that they too had been
blacklisted. The decision was a composite one, blacklisting not only
Sneller Digital,
but also its directors and other persons and
entities. It would be artificial and absurd to suggest that the
decision to blacklist
Sneller Digital, having been communicated
directly by the STB to Sneller Digital’s attorney and thence to
its directors,
is final but the remainder of the decision –
blacklisting the directors – is not. This argument has been
dealt with
in relation to the DVP case and is bad for the reasons
stated above.
[42] In the result, the appeal in the
Sneller Digital matter cannot succeed.
Conclusion and order
[43] It is necessary to comment on the
defences raised by the appellant in both matters and the conduct of
the STB throughout this
dispute. The appellant took the point that
the decision to blacklist DVP had not been communicated to it by the
STB, despite knowing
that his own attorneys had made the decision
public by providing it to the company that was blacklisted at the
same time, and despite
knowing that DVP had actual knowledge of the
decision as a result. It took the same point in relation to the
directors of Sneller
Digital. The decision to blacklist DVP and the
directors of Sneller Digital was a decision that had very real and
prejudicial consequences
for them. The fact that the STB had not
bothered to tell DVP that it had been blacklisted for a period of
almost nine months from
the taking of the decision until the filing
of the rule 53 record is not explained. Then it opposed the
application brought by
DVP on spurious grounds and persisted in them
on appeal, raising the same spurious ground against the directors of
Sneller Digital.
The other grounds raised in the Sneller Digital
matter are not much better. All of this speaks of an organ of state
that has conducted
itself with contempt for the rights of DVP,
Sneller Digital and its directors and with disdain for the
constitutional values of
accountability, responsiveness and openness.
[44] The following order is made:
Both appeals are dismissed with costs.
____________________
C. PLASKET
ACTING JUDGE OF APPEAL
APPEARANCES
Appellants B.R. Tokota SC and Z.Z.
Matebese
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
Respondents E.C. Labuschagne SC
Instructed by:
Cox Yeats Attorneys, Durban
Honey Attorneys, Bloemfontein
1
See
generally, Cora Hoexter
Administrative
Law in South Africa
(2007) at 518-520.
2
Lawrence
Baxter
Administrative
Law
(1984)
at 720.
3
Estate
Garlick v Commissioner for Inland Revenue
1934
AD 499
at 502.
4
Lek
v Estate Agents Board
1978
(3) SA 160
(C) at 167H-168A.
5
Note
1
at 520.
6
Chairman,
State Tender Board & another v Supersonic Tours (Pty) Ltd
[2008] ZASCA 56
;
2008
(6) SA 220
(SCA).
7
Para
14.
8
Christopher
Forsyth and Emma Dring ‘The Final Frontier: The Emergence of
Material Error of Fact as a Ground for Judicial
Review’ in
Christopher Forsyth, Mark Elliot, Swati Jhaveri, Michael Ramsden and
Anne Scully-Hill (eds)
Effective
Judicial Review: A Cornerstone of Good Governance
(2010) 245 at
250-257.
9
Chairpersons’
Association v Minister of Arts and Culture & others
2007 (5) SA 236
(SCA) para 48.
10
Pepcor
Retirement Fund & another v Financial Services Board &
another
2003
(6) SA 38
(SCA) para 47. See too
Government
Employees Pension Fund & another v Buitendag & others
2007 (4) SA 2
(SCA).
11
Kotzé
v Minister of Health & another
1996
(3) BCLR 417
(T) at 425F-G.