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[2016] ZAGPPHC 138
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Tasima (Pty) Ltd v Department of Transport and Others (44095/2012) [2016] ZAGPPHC 138 (11 April 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE NO: 44095/2012
11/4/2016
TASIMA (PTY)
LTD
Applicant
and
THE DEPARTMENT OF
TRANSPORT
First
Respondent
THE DIRECTOR-GENERAL:
DEPARTMENT
OF
TRANSPORT
Second
Respondent
THE MINISTER OF
TRANSPORT
Third
Respondent
WERNER EDUARD
KOEKEMOER
Fourth
Respondent
ROAD TRAFFIC
MANAGEMENT CORPORATION
Fifth
Respondent
COLLINS
LETSOALO
Sixth
Respondent
KEVIN JOSHUA
KARA-VALA
Seventh
Respondent
MORNE
GERBER
Eighth
Respondent
GILBERTO
MARTINS
Ninth
Respondent
CHRIS
HLABISA
Tenth
Respondent
MAKHOSINI
MSIBI
Eleventh
Respondent
JUDGMENT
AC BASSON, J
The applicant
[1]
The
applicant, Tasima (Pty) Ltd, is the developer, custodian and operator
of the Electronic National Traffic Information System
(the so-called
“eNatIS System”). The eNatIS System has also been
designated as a national key point under the National
Key Points
Act.
[1]
[2]
The
applicant brings this application in its own interest and in the
public interest in light of the immense practical and strategic
importance of the services rendered by the applicant as the custodian
and sole operator of the eNaTIS System to the general public
across
all nine provinces.
[3]
The
applicant launched this application on an urgent basis seeking
compliance with several extant orders granted by this court (“the
High Court orders”) and an order of the Supreme Court of
Appeals (“the SCA”) in the matter of
Tasima
(Pty) Ltd v Department of Transport
[2]
handed down on 2 December 2015 (“the SCA order”). (I will
refer to these orders in more detail herein below.)
[4]
The
applicant also seeks an order declaring that the 1
st
,
2
nd
,
5
th
and 10
th
respondents are in contempt of various paragraphs contained in the
High Court orders. More in particular, the applicant seeks an
order
compelling the respondents to make payment of certain monies which
are due (in the amount of R 176 683 116.70);
process
certain of the applicant’s Purchase Requisition Orders
(“PRQ’s”); afford the applicant the benefit
of a
lease agreement and the LAN- Desk license and to grant the applicant
full access to the eNaTIS Data/ Recovery Centre situated
in Pretoria
(“the DRC”).
[5]
The
applicant further seeks an order in terms of section 18(3) of the
Superior Courts Act
[3]
(“the
Act”) that the SCA order operates and be executed in full until
the final determination of the respondents’
appeal against the
SCA’s judgment and order to the Constitutional Court.
[6]
The
applicant claims that it is forced yet again to bring the present
application not only to protect its own position (as endorsed
by
numerous extant High Court orders) but also to protect the integrity
of the eNaTIS System. The applicant states that because
of the
respondents’ persistence - even in the face of various binding
High Court orders - in refusing to pay certain amounts
necessary to
enable the applicant to operate the eNaTIS system effectively, the
eNaTIS Sytem faces the potential of total collapse.
This pattern of
non-compliance has repeated itself for 3 ½ years since about
August 2012. Further, despite various court
orders preventing the
respondents from taking unlawful and premature transfer of the eNaTIS
System and compelling them to abide
by the contractual and data
transfer management provisions, the respondents persist with attempts
to transfer the eNaTIS System
to a third party. (I will return to the
so-called transfer management process herein below.)
The respondent and the
counter-application
[7]
This
application is opposed by the first respondent (the Department of
Transport - “the DOT”); the second respondent
(the
Director-General: Department of Transport); the third respondent (the
Minister of Transport”); the sixth respondent
(Mr Collins
Letsoalo – previously the acting Chief Executive Officer of the
fifth respondent) and the 10
th
respondent (Mr Chris Hlabisa - the Deputy Director-General of the
DOT: Roads Transport). (I will refer to these respondents
collectively
as “the respondents” where applicable.)
[8]
The
respondents have brought a counter-application in which it seeks
extensive relief discharging the various High Court orders.
The
respondents also seek an order extending the order by the Full Court
(“the Full Bench order”) preserving the
status
quo
between the parties - (i) pending the determination by the
Constitutional Court for leave to appeal against the judgment of the
SCA; and (ii) until this court declares that the agreement (the
Turnkey Agreement for the provision of the eNaTIS System) between
the
parties is of no force and effect. I should interpose here and point
out that should this court extend the order of the Full
Bench until
this court declares that the agreement between the parties is of no
force and effect, such order could have the effect
of perpetuating
the
status
quo
for
what could be an indefinite period.
[9]
In respect
of the Full Bench order it was also tendered on behalf of the DOT
that should this court extend this order, the DOT tenders
to pay the
outstanding amounts in fact owed by the applicant to third party
service providers and to pay what the applicant claims
as its
management fee into escrow (pursuant to a separate table with
supporting documentation to be provided by the applicant evidencing
its management fee up until the date of cancellation. (I will return
to the merits of this submission herein below.)
Urgency
[10]
This matter
was originally enrolled for hearing on the urgent roll on 12 January
2012 but did not proceed. The matter proceeded
on 26 February 2016.
Although the respondents do not dispute the urgency of the
applicant’s application, the applicant disputes
the urgency of
the respondents’ counter-application and submits that the
respondents’ counter-application ought to
be struck from the
roll or dismissed.
Background
[11]
The papers
are voluminous and in light of the fact that this matter has been
enrolled as an urgent application, I do not intend
giving a detailed
exposition of the history that precedes this application and will
suffice with a brief overview of some of the
events that gave rise to
this dispute.
[12]
Pursuant to
a tender process the applicant was awarded the contract in 2001 to
develop, manage and operate the eNaTIS System. The
applicant is the
sole party operating and maintaining the eNaTIS System. The eNaTIS
System operates across all nine provinces and
operates the licensing
of all motor vehicles, driver’s license tests, learner licence
tests, contraventions of road traffic
legislation and the
roadworthiness of vehicles. It is not in dispute that the eNaTIS
System is of critical national importance.
[13]
The
applicant and the DOT are the parties to the so-called Turnkey
Agreement for the provision of the eNaTIS System (“the
agreement”). The agreement dated 3 December 2001 was
subsequently amended and extended. This agreement initially was for
a
five year period commencing on 1 June 2002 and expiring on 31 May
2007.
Extension of the
agreement
[14]
The
applicant made representations to the then Director-General (Ms
Mpofu) for the extension of the agreement. Mpofu made it clear
that
the contract would not be extended and that the contract was in the
transfer phase. The transfer of the eNaTIS System back
to the DOT
was, however, never finalised. The DOT also did not issue a notice
for a Transfer Management Plan meeting as is required
by the
agreement whenever the agreement has expired or upon termination of
the agreement.
[15]
The
appointment of Mpofu came to an end on 31 October 2009. Mr Mahlalela
(“Mahlalela”) was then appointed as the new
Director-General in February 2010. In 2010 the latest extension for a
further five-year period was granted by Mahlalela after new
presentations were submitted to the DOT by the applicant. The
agreement was extended from 1 May 2010 to 30 April 2015. The validity
of this extension has been the subject of fierce litigation between
the parties and is also now the subject of a criminal investigation.
According to the respondents this extension was clearly unlawful.
[16]
For obvious
reasons this extension was of critical importance to the applicant in
that it not only secured the applicant’s
continued operation of
the eNaTIS System until 30 April 2015, but also provided for a phased
handover of the system to the DOT
pursuant to a negotiated transfer
management regime under Clause 26 of, read with Schedule 15 to the
agreement. (I will return
to these provisions herein below.)
Mabuse, J order
[17]
In March
2012, despite the extension granted on 2010 by Mahlalela, the
applicant was informed by means of a letter from the DOT
that the
agreement between the parties would terminate on 31 May 2012. The DOT
also challenged the validity of the extension and
sought immediate
transfer of the eNaTIS system.
[18]
Upon
receipt of the said letter the applicant invoked the dispute
resolution mechanisms provided for in Clause 24 read with Schedule
13
of the agreement.
[4]
At the same
time the applicant also brought an application for an order to compel
the DOT to perform its obligations in terms of
the agreement pending
the finalisation of the dispute resolution proceedings it had
instituted (“the main dispute”).
Mabuse, J granted the
application for an interim order to maintain the
status
quo
and also directed the DOT to comply with its obligations in terms of
the agreement (including the extended agreement) pending the
finalisation of the dispute resolution proceedings. Leave to appeal
against this order was refused by Mabuse, J himself as well
as by the
SCA.
Transfer Management
Provisions
[19]
It is
necessary to briefly explain what procedures must be followed to hand
over the operations of the eNaTIS System once it is
terminated or in
the event the agreement expires.
[20]
Clause 26
read with Schedule 15 to the agreement makes specific provision for a
process to transfer the management of the eNaTIS
System to a third
party (or back to the DOT) once the main agreement is “terminated
for any reason”. According to the
applicant the transfer
management provisions contained in Clause 26 read with Schedule 15 to
the agreement, expressly survive the
termination of the agreement. (I
will return to this submission where I deal with the respondents’
refusal to make payment
to the applicant for any services rendered by
the applicant after 30 April 2015 which is the date upon which the
agreement (as
extended) came to an end.)
[21]
Once the
agreement is terminated “for any reason whatsoever”,
Schedule 15 of the agreement comes into operation. This
schedule is
fairly detailed and provides for a so-called “Transfer
Management Plan”. In terms of Clause 2.2 of Schedule
15, the
DOT must submit a written request to the applicant for a transfer
management plan meeting “which request shall be
made no later
than 90 (ninety) days after the Agreement Termination Date”.
The parties to the agreement are thereafter required
to meet and
agree on a transfer management plan with agreed time scales. This
process is intended to ensure a phased in and gradual
hand over of
functions by the applicant to the DOT or a nominated third-party. In
this regard the introductory paragraph to Schedule
15 specifically
states that:
“
In view of the
strategic importance of the eNaTIS to the State, it is necessary to
make provision for the orderly transfer of the
NaTIS and Services
provided in respect thereof from Contractor to the State or a third
party provider should this Agreement or
any part thereof terminate or
expire for any reason whatsoever. This schedule contains the
provisions relating to such a transfer.”
[22]
It is
common cause thatagreement expired on 30 April 2015. As per the
provisions of Clause 26, the procedure as set out in Schedule
15
became operative and obliged the parties from 1 May 2015 to operate
in terms of the transfer management provisions. It is, however,
common cause that these provisions have not yet been implemented nor
has the DOT issued a written request to the applicant to meet
and
agree on a transfer management plan with agreed time scales.
Seven extant order
granted by the North Gauteng High Court
[23]
I have
already referred to the fact that the applicant has successfully
obtained various orders against the respondents (identified
in the
different orders) including seven contempt orders against various
respondents for its persistent refusal to comply with
various court
orders and more in particular with the Mabuse, J order.
[24]
All of
these orders were obtained in this division. On behalf of the
applicant it was pointed out that all of these orders are currently
extant and that all of these orders operate pending the finalisation
of the determination of the main dispute yet to be decided
in terms
of the agreement’s dispute resolution mechanism. As already
pointed out this process has not yet been finalised.
(i)
On 7 August
2012
Teffo,J
granted an order that the DOT will, pending the finalisation of the
main application, pay the applicant for all the services rendered
or
to be rendered and obligations incurred or to be incurred by the
applicant in connection with the eNaTIS System. In addition
to
ordering the respondent to comply with all of its obligations under
the agreement, the respondent was further order to comply
with
specific payment obligations.
(ii) I have already
referred to the order dated 17 October 2012 by
Mabuse, J
in
terms of which it was ordered that, pending the finalisation of the
dispute resolution proceedings instituted by the applicant
in terms
of Clause 24 and Schedule 15 of the agreement (dated 2 December
2001), the DOT is directed to perform its obligations
in terms of the
agreement and to comply with certain payment obligations.
(iii)
On 26 March
2013
Strydom,
AJ
ordered that, pending the finalisation of the dispute resolution
proceedings between the applicant and the DOT, the respondents
(identified in that order) are interdicted from taking any steps
(including entering into any contract with third parties) which
have
the effect of rerouting or diverting any of the services, which the
applicant undertook to perform under the agreement, away
from the
applicant.
(iv)
On 15 July
2013
Ebersohn
,
AJ held certain of the respondents to be in contempt of court of
certain paragraphs of the
Mabuse,
J order. The court also ordered the respondents to make certain
payments to the applicant and to grant certain authorisations and
approvals.
(v)
On 27
August 2013
Fabricius,
J
, with
reference to the order by
Strydom
,
AJ, also granted an order interdicting the respondents from taking
any steps which have the effect of rerouting or diverging any
of the
services rendered by the applicant, including but not limited to the
issuing of any instructions to the applicant or any
third party to
terminate any agreement or arrangement under or in relation to the
agreement and/or the eNaTIS System. In addition,
it was ordered that
the respondents undertake not to interfere with, or censor or
restrain any communications between the provinces
and the applicant
under, or in relation to the agreement or the eNaTIS System. The
respondents (identified in the order) were also
ordered to grant the
authorisations and approvals contained in the schedule annexed to the
papers.
(vii) On 5 November 2013
Nkosi, J
granted an order,
inter alia
, compelling the
respondents (identified in that order) to comply with the
Mabuse
,
J order and the
Fabricius,
J order as well as with the orders
of
Strydom
, AJ and
Ebersohn
, AJ.
(viii)
On 21
January 2014
Rabie,
J
also
held certain respondents to be in contempt.
[25]
In addition
to the these orders, a full bench of this court (Fabricius, J,
Fourie, J and Wentzel, AJ) granted an order (on 30 October
2015)
prior to the hearing of the appeal (which was set to be heard by the
SCA on 23 November 2015) in terms of which it was ordered
that
pending the determination of the appeal the
status
quo
would subsist. On behalf of the respondents it was submitted that
this order should be extended pending the outcome of the appeal
to
the Constitutional Court. (I will return to these submissions herein
below where I consider the counter-application.)
[26]
In summary:
In terms of the various High Court orders, the DOT and its officials
were interdicted to take any steps to effect a
premature transfer of
the eNaTIS System contrary to the provisions of Schedule 15 to the
agreement. Furthermore, for the duration
of transfer of the eNaTIS
System the DOT was directed to pay the applicant for all services
rendered under the agreement; all PRQ’s
are to be processed in
accordance with the agreement and material contracts and agreements
required to be approved by the DOT would
be approved within five days
of the request by the applicant. In short, none of the respondents
may take any steps designated to
undermine the efficacy or
implementation of the various High Court orders and none of them can
act contrary to any of these orders.
[27]
Of
particular importance is the order by Mabuse, J in terms of which the
DOT was ordered to comply with all its obligations pending
the
finalisation of the dispute referred in terms of the dispute
resolution proceedings. More in particular the DOT was ordered
to
comply with all its payment obligations. The other orders of
particular relevance to this application is the order by Strijdom,
J; Fabricius, J; Rabie, J; Nkosi, J and lastly the SCA order.
[28]
Up to date
no resolution has been reached in terms of the dispute resolution
process. Consequently, so it was submitted on behalf
of the
applicant, all of these orders remain extant and of full force and
effect.
[29]
Despite
these orders, the DOT and it’s officers have adopted the
position that the applicant is not to be paid for services
rendered
from 1 May 2015; no PRQ’s will be processed; no agreements or
contracts will be approved and the applicant is to
be denied access
to critical components of the eNaTIS System most notably the Disaster
/ Data Recovery Centre.
[30]
More in
particular, and despite the existence of the various High Court
orders, various of the respondents continue to unlawfully
attempt to
- (i) take transfer of the eNaTIS System from the applicant; (ii)
divert work away from the applicant; (iii) refuse
to comply with
required processes under the agreement and/or (iv) starve the
applicant of funds. Moreover according to the applicant,
the DOT and
its officers simply refuse to implement the process mandated by
Schedule 15 (which allows for a transfer management
plan meeting and
for a transfer management process) despite the fact that the main
agreement had expired on 30 April 2015.
Application before
Hughes, J
[31]
Because of
the DOT’s and its officers’ persistence in ignoring the
provisions of Clause 26 read with Schedule 15 (to
implement the
Transfer Management Process) a dispute arose in March 2015. A dispute
also arose regarding the DOT’s and its
officers’
continued attempts to effect the transfer of the eNaTIS System from
the applicant to a third party. This conduct
again necessitated the
applicant to approach this court in March 2015: The applicant,
inter
alia
,
sought declarations of breach and wilful contempt against the DOT in
respect of specific paragraphs contained in the various High
Court
orders and more in particular with reference to orders by Mabusa, J;
Strijdom, AJ; Fabricius, J and Rabie,J.
[32]
In turn the
DOT brought a counter-application seeking,
inter
alia
,
to declare the extension of the agreement in 2010 by the then
Director-General of the DOT (Mahlalela) invalid on the basis of
illegality.
[33]
Hughes, J
dismissed the application for contempt and granted the
counter-application. The court also reviewed and set aside the
decision by the then Director-General and declared the extended
contract which took effect from 1 May 2010 and expired on 30 April
2015 to be void
ab
initio
.
[34]
The
applicant successfully appealed this judgement and order to the SCA.
Supreme Court of
Appeals
[35]
On 2
December 2015 the SCA handed down its judgement and order. Subsequent
to this judgment the respondents applied for Leave to
Appeal against
this judgment to the Constitutional Court.
[36]
Although I
am mindful of the fact that this judgement is currently the subject
of an appeal process, it is necessary for purposes
of this judgement
to briefly refer to some of the findings of the SCA in so far as some
of its findings have a bearing on the questions
before this Court.
[37]
The SCA
declared that five of the respondents are in contempt of one or more
paragraphs of the different High Court orders. The
SCA also ordered
that the respondents may not transfer the eNaTIS System and its
services (as defined in the agreement dated 3
December 2001 as
subsequently amended)
except
in terms of the transfer management plan as envisaged in Schedule 15
of the agreement. Moreover, it ordered that for the duration
of the
transfer of the eNaTIS System and its services - (i) the applicant is
to be paid by the DOT for all services rendered under
the agreement
in accordance with the agreement and in accordance with paragraph 1.2
of the Mabuse, J order; (ii) all PRQ’s
are to be processed in
accordance with the agreement and paragraph 4 of the Nkosi, J order;
(iii) all material contracts and agreements
required to be approved
by the DOT will be so approved within five days of the request by the
applicant. The court also dismissed
the respondents’
counter-application dated 26 March 2015 and accordingly set aside the
order of the court
a
quo
reviewing and setting aside - on the basis of illegality - the
decision of the then Director-General to extend the contract
period
for a further five years.
[38]
Of
particular importance to this application is the court’s
finding in respect of the various High Court orders since 2011
and
the status of these orders. It is clear from the reasoning of the SCA
that the various High Court orders remain extant and
must be obeyed
until such time they have been set aside by a court of competent
jurisdiction:
“
[16] I do not
share the court a quo’s view that the setting aside of the
impugned extension would insulate the respondents
from a finding that
they were in contempt of court. On the contrary, as I see it, the
outcome of the review application is entirely
irrelevant to the
question whether the respondents were acting in contempt of the
court’s orders. Should the review application
be successful, it
may impact on the future in that it could serve as a basis for
setting the court orders aside. But unless and
until these orders are
set aside by a court of competent jurisdiction, they stand and must
be obeyed. That much was clearly stated
by Streicher ADP in
Clipsa
Australia (Pty) Ltd & others v GAP Distributors (Pty) Ltd &
others
2010
(2) SA 289
(SCA) para 22. In a constitutional democracy based on the
rule of law, court orders must be complied with by private citizens
and
the State alike. As members of the executive organs of State, the
respondents are held to an even higher standard. Not only must
they
act in strict compliance with court orders, but they are also bound
to facilitate the efficiency of the judicial branch (see
eg
Minister
of Home Affairs & others v Somali Association of South Africa
Eastern Cape (SASA EC) & another
2015
(3) SA 545
(SCA) paras 34-36 and 27; and
Nyanthi
v MEC for the Department of Health, Gauteng & another
2008
(5) SA 94
(CC) para 43). The setting aside of a contract which forms
the basis of a court order, does not negate the force of the order
nor
does it excuse the failure to comply with it.”
The current
application
[39]
On 2
December 2015, after receipt of the SCA order and judgement, the
applicant requested payment of certain outstanding payment
certificates which the DOT had refused to pay amounting to R
176 683 116.70. To this end the applicant relied not only
on the SCA judgement and order but also on the various High Court
orders.
[40]
Despite a
demand for payment and compliance with the agreement and despite the
fact that the applicant is still operating the eNaTIS
Sytem, no
payments have been received from the DOT in respect of services
rendered since May 2015. In addition hereto and despite
the various
High Court orders, the 10
th
respondent had failed to sign or approve any PRQ’s since May
2015. According to the applicant the DOT has also failed to
approve
the applicant’s lease contract in respect of the premises from
which the eNaTIS System operates and similarly failed
to approve the
applicant’s renewing of a LAN-Desk software license.
[41]
The
applicant explained in great detail how the eNaTIS System has been
operating the past few years and how PRQs (which set out
the
necessary expenditure to operate, manage and maintain the system) are
processed and approved by the DOT. It is for purposes
of this
judgement not necessary to give a detailed overview of these
procedures. Suffice to point out that, according to the applicant,
the respondents have failed to approve PRQs since May 2015 and have
failed to effect any payments in terms of these PRQs.
This
failure has resulted in the non-payment of,
inter
alia
,
electricity bills, the South African Post Office (which renders
various services to the public in respect of the eNaTIS System),
security services, and services rendered by communication service
providers. According to the applicant this non-payment may result
in
rendering the eNaTIS inoperable and may potentially jeopardise the
entire eNaTIS System.
[42]
This
failure by the various respondents to comply with their obligations
in terms of the agreement and in light of the SCA order,
prompted the
applicant to file an urgent application on 21 December 2015 for the
relief sought in the Notice of Motion. As already
pointed out the
applicant is seeking an order to compel the respondents to continue
with their obligations in terms of the agreement
and to hold the
various respondents in contempt of the High Court orders and the SCA
order. As already pointed, out the applicant
is also seeking an order
in terms of section 18(3) of the Act. The applicant therefore
approached this court on the strength of
the various High Court
orders which it submitted operate independently. Because they operate
independently, so it was submitted,
the DOT and its officers are
still bound by them. As already pointed out, this was also the
view held by the SCA that, unless
and until these orders are set
aside by a court of competent jurisdiction, they stand and must be
obeyed.
[43]
The
applicant further explained that they are forced to approach the
court yet again because the respondents only carry out their
obligations after the applicant obtains mandatory orders compelling
them to carry out their obligations. This was also why the
applicant
had to approach this court on numerous occasions in the past to
prevent the respondents from affecting the unlawful and
premature
transfer of the eNaTIS system and to require them to comply with
their contractual obligations. In terms of the SCA judgment
the
respondents were yet again found to be guilty of contempt of court
and were yet again ordered to comply with the transfer management
provisions of the agreement. More in particular, the respondents were
yet again ordered to pay the applicant for services rendered
and to
process all PRQs submitted to the DOT.
[44]
The
applicant therefore persisted with its submission that the serving of
the Application for Leave to Appeal to the Constitutional
Court is of
little moment and that it in no way entitles the respondents to
ignore all of the other various High Court orders which
remain extant
and enforceable and have never been successfully appealed against.
[45]
The court’s
attention was further drawn to the fact that in the Leave to Appeal
application (against the SCA order), the various
High Court orders
are left unchallenged and undisturbed. The respondents’ attempt
to appeal the SCA judgment accordingly
in no way excuse their
non-compliance with the extant orders: These orders cannot simply be
ignored and must therefore to be enforced.
There, accordingly, exists
no lawful basis for refusing to comply with these orders. The
applicants submitted that, insofar as
the respondents have failed to
comply with these orders from 1 May 2015, they are therefore in
contempt of court.
[46]
It is
instructive to note that the SCA in its judgment also was of the view
that the Mabuse, J order subsists and that all the other
orders
granted by the High Court under case number 44095 from 2012 to 2014
subsist. In this regard the SCA held as follows:
“
[10] … From
the context of Mabuse J’s judgment it is clear that by his
reference to “the agreement‟ he
intended to include the
alleged extension of the contract period until 30 April 2015
(contended for by Tasima) as well as the period
of transition
contemplated in Clause 26 and schedule 15. Subsequently, the
Department’s application for leave to appeal against
the Mabuse
J order was refused, first by Mabuse J himself and then by this
court. A debate arose on the papers as to who was to
blame for the
fact that the dispute proceedings instituted by Tasima in 2012 had
not yet been finalised. As I see it, however,
the outcome of this
debate is of no consequence. No application was brought to discharge
or terminate the Mabuse J order. So it
remains extant.”
[47]
In this
regard the SCA referred to the judgment in
Clipsal
Australia (Pty) Ltd and OTHERS v GAP Distributors and Others
where
the SCA emphasised the importance of obeying court orders until such
time they have been set aside:
[5]
“
[22] In its
judgment the court below itself refers to
Culverwell
v Beira
1992
(4) SA 490 (W)
at
494A - E where Goldstein J said that orders of court have to be
obeyed until set aside and that chaos may result if people
were
allowed to defy court orders with impunity. It also refers to the
judgment of Froneman J in
Bezuidenhout
v Patensie Sitrus Beherend Bpk
2001
(2) SA 224
(E)
at
228F - 230A where, relying on
Culverwell
and
Kotze
,
Froneman J said that an order of a court of law stands and must be
obeyed until set aside by a court of competent jurisdiction.
Having
done so with apparent approval and having stated that it is obliged
to apply the judgment of this court, it is inexplicable
how it
could then, on the basis that the judgment could be wrong, have
considered the outcome of the review application to be of
any
relevance to the contempt application.”
[6]
The questions before
this court
[48]
The
following issues fall to be decided by this court in respect of this
application:
(i)
Whether or
not the High Court orders exist independently of the SCA order and
whether they will therefore have to be enforced on
their own terms
despite the pending Application for Leave to Appeal to the
Constitutional Court.
(ii)
In respect
of the section 18(3) application, whether this court has jurisdiction
to grant the relief sought and if so, whether the
applicant has
established the requirements set out in section 18 of the Act so that
the SCA order may be enforced pending the appeal
to the
Constitutional Court. In this regard the court must decide - (a)
whether exceptional circumstances exist that justify the
implementation of the SCA order pending the appeal; (b) whether the
applicant will suffer irreparable harm if the SCA order is
not
enforced in spite of the appeal; and (c) whether the DOT will suffer
irreparable harm if this court orders that the SCA order
be
implemented pending the outcome of the appeal process.
[49]
The
following issues falls to be decided by this court in respect of the
counter-application:
(i)
Is the
DOT’s counter-application urgent?
(ii)
Did the DOT
demonstrate a basis for the discharge of the various High Court
orders?
(iii)
Whether the
court should grant the extension of the order of the Full Bench
(dated 30 October 2015)?
Status of the High
Court orders
[50]
I have
already to the fact that the respondents in their Application for
Leave to Appeal left the various High Court orders unchallenged.
[51]
Because the
respondents are well aware of the views expressed by the SCA that
these orders remain extant, they have not launched
a
counter-application in which it seeks,
inter
alia
,
that these orders are discharged. (I will return to the merits of the
counter-application herein below.)
[52]
As far as
the status of the various High Court orders is concerned, I am in
agreement with the applicant that the orders remain
extant until such
time they have been set aside.
[53]
Having
concluded that the various High Court orders remain extant, it then
needs to be determined whether the respondents are in
contempt of
these orders.
Contempt of the High
Court orders including the SCA order
[54]
The
principles regarding civil contempt are well-known and are
established where there is a wilful refusal or failure to comply
with
an order of court. See this regard
Fakie
NO CCII System (Pty) Ltd
[7]
where the court held in this regard that the applicant must
establish- (i) the order; (ii) service or notice of the order; (iii)
non-compliance with the order; (iv) wilfulness and
mala
fides
in the non-compliance. Once the applicant has proved (i) –
(iii)
mala
fides
is presumed.
[55]
It is trite
that there is a duty on parties to comply with court orders.
This obligation is even more important in the case
of the State. See
in this regard:
Bezuidenhout
v Patensie Sitrus Beherend Bpk:
[8]
“
An order of a
court of law stands until set aside by a court of competent
jurisdiction. Until that is done the court order must
be obeyed even
if it may be wrong (
Culverwell
v Beira
1992
(4) SA 490 (W)
at
494A - C). A person may even be barred from approaching the court
until he or she has obeyed an order of court that has not been
properly set aside (
Hadkinson
v Hadkinson
[1952] 2 All ER 567
(CA);
Bylieveldt
v Redpath
1982
(1) SA 702
(A)
at
714). In
Kotze
v Kotze
1953
(2) SA 184 (C)
Herbstein
J provided the rationale at 187F:
'The
matter is one of public policy which requires that there shall be
obedience to orders of Court and that people should not be
allowed to
take the law into their own hands.' “
[9]
See also:
Pheko
and Others v Ekurhuleni City:
[10]
“
[1]
The rule of law, a foundational value of the Constitution, requires
that the dignity and authority of the courts be upheld.
This is
crucial, as the capacity of the courts to carry out their functions
depends upon it. As the Constitution commands, orders
and decisions
issued by a court bind all persons to whom and organs of state to
which they apply, and no person or organ of state
may interfere, in
any manner, with the functioning of the courts. It follows from
this that disobedience towards court orders
or decisions risks
rendering our courts impotent and judicial authority a mere mockery.
The effectiveness of court orders or decisions
is substantially
determined by the assurance that they will be enforced.
[2]
Courts have the power to ensure that their decisions or orders
are complied with by all and sundry, including organs of
state.
In doing so, courts are not only giving effect to the rights of the
successful litigant but also and more importantly, by
acting as
guardians of the Constitution, asserting their authority in the
public interest. It is thus unsurprising that courts
may, as is the
position in this case, raise the issue of civil contempt of
their own accord.
…
.
[27]
Notwithstanding this clear constitutional imperative that
the authority of our courts is to be respected and upheld,
certain state parties have, on occasion, displayed a troubling
disregard for judicial orders. It is not difficult to reference
examples of cases involving contempt, by state organs, of court
orders where, most troublingly, constitutional rights are in issue.
The cases are by no means exhaustive of state parties' non-compliance
with the orders and decisions of our courts; they are
included merely
to illustrate the extent and nature of this phenomenon. What they
show is not merely that state parties are failing,
in a very serious
way, to meet their constitutional obligations, but that these
failures have real and serious consequences for
those whose interests
they are there to serve.”
[11]
[56]
It is not
in dispute that the High Court orders (in particular the orders by
Mabuse, J, Strijdom, AJ and Fabricius, J) were made
available to the
respondents. The SCA judgement order was also served on the
respondents on 2 December 2015. It is also not in
dispute that the
respondents have failed to comply with these orders at least since
May 2015 in respect of payment for services
rendered by the
applicant; the PRQ’s and that the respondent have failed to
approve necessary agreement and contracts.
[57]
The
respondents attempt to justify the non-compliance with these orders
and therefore the fact that they are in contempt, on the
basis that
an Application for Leave to Appeal the SCA order to the
Constitutional Court has been lodged. Secondly, the respondents
rely on their
bona
fides
and thirdly, the respondents rely on their counter-application to
justify their non-compliance. More in particular, the respondents
claim that they are in any event not obliged to make any payments in
that payments with reference to the allegations of fraud and
corruption are precluded by law. Because of these allegations of
criminality, the respondents therefore are
bona
fide
in
their refusal to make payments to the applicant as they are obliged
to guard public funds and to prevent it being paid to a
participant
in corrupt activities “under the pretext of misconstrued court
orders”.
[58]
I am in
agreement that the respondents cannot rely on the lodging of the
Application for Leave to Appeal to the Constitutional Court.
In this
regard I have repeatedly referred to the fact that the Application
for Leave to Appeal to the Constitutional Court leaves
the various
High Court orders unchallenged.
[59]
I am
particularly not persuaded by the argument that the refusal to comply
with these orders is
bona
fide
:
Court orders must be obeyed and cannot be ignored or disobeyed.
Furthermore, these orders must be obeyed regardless of whether
there
is a perception that these orders are wrong and/or whether such
persons believe
bona
fide
or
otherwise that there exists some or other basis for those orders to
be set aside or discharged at some future point. This
was also
the view of the SCA. Despite the fact that the SCA judgment makes it
absolutely clear that the Mabuse, J order and the
other orders remain
extant, the respondent’s actions display a total disregard for
these orders. The fact that a public body
persists with this conduct
of total defiance of various orders of this Court’s orders is
simply unacceptable. Furthermore,
the fact that the respondents may
hold the view that these orders were “misconstrued” is
irrelevant and of no consequence:
These orders stand irrespective of
whether the respondents may hold this view. Furthermore, I am in
agreement with the submission
on behalf of the applicant that the
conduct of the respondents is even more egregious as they are state
entities: In breach of
their obligations under section 165 of the
Constitution each of the respondents has now made it plain in their
answering affidavit
that they have no intention to abide by any of
this court’s orders. It was precisely this conduct that had
necessitated the
applicant to approach this court on numerous
occasions in the past.
[60]
Lastly, the
respondents cannot and do not deny that the court orders are extant
and enforceable. This is borne out by the fact that
the respondents
now seeks on an extremely urgent basis in a counter-application to
discharge these order on the basis that all
of these orders were
granted by the various Judges of this division whilst not being aware
of the serious allegations of fraud
and corruption. I will return to
these allegations herein below. Suffice to point out that the
fact that there are these
allegations of fraud and corruption does
not mean that the various High Court orders are therefore invalid.
They remain valid and
binding until such a time that they have been
set aside or discharged. The counter-application is not a defence to
contempt of
court proceedings as it is trite that court orders must
be obeyed right up until they are set aside. I should also point out
that
the SCA was aware of these allegations and still handed down its
judgment despite these allegations.
[61]
Accordingly,
in so far as the DOT and its officials have failed and/or refused to
comply with the various High Court orders, including
the SCA order,
they are held in contempt.
[62]
It was also
submitted on behalf of the respondents that the judges who granted
the various orders were not aware of “the allegations
of fraud
and corruption”. I have already referred to the fact that these
allegations were in fact before the SCA and that
the court handed
down the judgement and order despite these allegations. These
allegations also pertinently featured in the matter
that served
before Hughes, J. It should also be pointed out that even if
the respondents are successful in discharging the
previous orders, in
other words in the event that the counter-application succeeds, it
does not follow that the respondent’s
contempt
prior
to the date of discharge is excused.
[63]
As already
pointed out the defence of the contempt application is premised
substantially on the counter-application. Before I turn
to the
counter-application, it is necessary to briefly consider the
application in terms of section 18(3) of the Act.
Section 18(3) of the
Superior Courts Act
[64]
The
applicant seeks an order providing for the enforcement of the SCA
order and other orders pending the final determination of
an appeal
against the SCA order to the constitutional court. Section 18 reads
as follows:
“
18. Suspension of
decision pending appeal
.
—
(1)
Subject to
subsections
(2) and (3), and unless the court under exceptional circumstances
orders otherwise, the operation and execution of a
decision which is
the subject of an application for leave to appeal or of an appeal, is
suspended pending the decision of the application
or appeal.
(2) Subject to subsection (3), unless
the court under exceptional circumstances orders otherwise, the
operation and execution of
a decision that is an interlocutory order
not having the effect of a final judgment, which is the subject of an
application for
leave to appeal or of an appeal, is not suspended
pending the decision of the application or appeal.
(3) A court may only order otherwise
as contemplated in subsection (1) or (2), if the party who applied to
the court to order otherwise,
in addition proves on a balance of
probabilities that he or she will suffer irreparable harm if the
court does not so order and
that the other party will not suffer
irreparable harm if the court so orders.
(4) ….
(5) For the purposes of subsections
(1) and (2), a dec
ision
becomes the subject of an application for leave to appeal or of an
appeal, as soon as an application for leave to appeal or
a notice of
appeal is lodged with the registrar in terms of the rules.
[65]
Before I
turn to a consideration of the relief sought in terms of this
section, it is necessary to first determine whether or not
this court
can grant, what essentially is exceptional relief, bearing in mind
that what is being asked for is for an order by the
SCA to be
executed pending the final determination of an appeal against that
order. Put differently, is it competent for the High
Court to
consider and/or grant an order to execute a judgement and order of a
higher court (the SCA)?
[66]
On behalf
of the respondents it was submitted that under the common law it is
clear that it is the court granting the order which
has the power to
control its order. Absent any clear provisions to the contrary the
legislature is presumed not to have intended
to alter the common law.
However, in the event that the court decides that it has jurisdiction
to consider and grant such an application,
it was submitted that the
respondents will indeed suffer irreparable harm.
[67]
It
should be borne in mind that once the SCA made the order, that order
became the order of the High Court. This much is clear from
the order
itself. Furthermore, the SCA is not a court of first instance and
does not entertain applications such as this especially
in light of
the fact that the order made by the SCA became an order of this
Court. I am therefore of the view that this Court has
the necessary
jurisdiction to entertain an application whether or not to order the
execution of an order by the SCA (which became
the order of this
court) pending the outcome of an appeal. See in this regard:
Occupiers
of Saratoga Avenue v City of Johannesburg Metropolitan Municipality
and Another
[12]
where
the Constitutional Court held that where an order is made on appeal,
the effect thereof is that the order effectively becomes
an order of
the High Court and that execution of that order should be done by
that court:
“
[7]
It is usual that in a successful appeal, the appellate court may make
the order that the court of first instance should have
made. That
order then becomes the order of the court of first instance.
Execution and enforcement of the order should then take
place in that
court.”
[8]
This Court has jurisdiction to hear matters other than as a court of
appeal.
Blue Moonlight I
was, however, not that kind of
case. It was an appeal against the judgment of the Supreme Court of
Appeal. Paragraph (e) of the
order made it clear that it was the
usual “set aside and replace” kind of order made in an
appeal. It effectively
became an order of the High Court.
[9]
The reason for enforcing orders in the original court is logical and
practical. The order on appeal merely corrects the original
order and
the court of first instance is usually best equipped to deal with
matters relating to the enforcement of that order.”
[68]
I
will now turn to a consideration of whether this court should grant
the relief sought in terms of section 18(3) of the Act.
[69]
It is trite
that, pending the final determination of an appeal and order by a
court (against which an Application for Leave to Appeal
has been
lodged or which is the subject of an appeal) will be suspended until
the final determination of the appeal. In terms
of section
18(1) of the Act a court may, however, in exceptional circumstances
and upon proof by the applicant of the irreparable
harm to them if
the court does not so order and lack of irreparable harm to the
respondent, order the operation and execution of
a judgement order.
[70]
The court
in
Incubeta
Holdings (Pty) Ltd v Ellis
[13]
confirmed that the test to be applied in considering this relief is
twofold: Firstly, whether or not “exceptional circumstances”
exist; and secondly, proof on a balance of probabilities by the
applicant of - (i) the presence of irreparable harm to the applicant
who wants to put into operation and execute the order; and (ii) the
absence of irreparable harm to the respondent with seeks leave
to
appeal. Sutherland, J summarised the requirements in respect of
“exceptional circumstances” as follows:
“
[22]
Necessarily, in my view, exceptionality must be fact-specific. The
circumstances which are or may be 'exceptional' must be
derived
from the actual predicaments in which the given litigants find
themselves. I am not of the view that one can be sure
that any true
novelty has been invented by s 18 by the use of the phrase. Although
that phrase may not have been employed in the
judgments, conceptually
the practice as exemplified by the text of rule 49(11), makes the
notion of the putting into operation
an order in the face of an
appeal process a matter which requires particular ad hoc
sanction from a court. It is expressly
recognised, therefore, as a
deviation from the norm, ie an outcome warranted only
'exceptionally'.”
[71]
I am of the
view that the applicant has made out a case for “exceptional
circumstances”. I have already referred to
the fact that the
eNaTIS system (a national key point) is of critical importance in
respect of the service that it renders to the
whole of South Africa.
The applicant is furthermore also the only entity that renders this
service to the public. Any payments
made to the applicant is
therefore not only for the benefit of the applicant, it is crucial
and in the interest of the public that
the integrity of this service
to the public is maintained. This service (the eNaTIS system)
has not yet been handed over
to a third party or to the DOT. In
fact, that process has not even begun as is required in terms of the
agreement.
[72]
On behalf
of the applicant it was therefore submitted that there is a need for
the immediate enforcement of the orders as without
such enforcement
there is an immediate and real likelihood that the applicant may not
be able to continue as a going concern if
the respondents continue
with its conduct of non-payment. The consequences resulting from such
continued non-payment may result
in the eNaTIS Sytem being
compromised. In fact, it was submitted that a total collapse of
the eNaTIS System is a real likelihood.
This state of affairs will in
turn render the SCA order meaningless. The applicant confirmed that
the DOT has not paid it under
the agreement since May 2015 and that
the amount outstanding to date is over R176 million. Since May 2015
the applicant had to
rely on its own reserves in an attempt to
continue operating the system. Should the DOT persist in non-payment,
the applicant will
also not be able to continue employing an optimal
staff component and will not be able to continue to operate essential
functions
required for the proper functioning of the eNaTIS
System.
[73]
In light of
the fact that the eNaTIS Sytem faces collapse, the applicant will
also suffer total collapse in light of the fact that
the applicant
performs no other functions save for that in terms of the eNaTIS
agreement. In other words, the income derived by
the applicant under
the agreement constitutes its sole income.
[74]
Since 1 May
2015 the applicant, in an attempt to support the eNaTIS System,
therefore had to turn to its own pockets to run the
system as no
income is channelled to the applicant despite the fact that it is
fully protected by numerous court orders. The applicant
submits that
the harm that it will suffer cannot be made good with any form of a
damages claim. The applicant further submits that
no harm will be
suffered by DOT as all that is required is payment necessary to run
the eNaTIS System and to ensure that vital
contracts must be entered
into by the respondents which are necessary for the effective running
of the eNaTIS System. Furthermore,
it is submitted that payments
received will be passed on to the service providers to ensure the
continued operation of the system.
Such payment would in any event
have to be made irrespective of who runs the eNaTIS System.
Accordingly, so it was submitted, the
DOT will suffer no financial
prejudice as the payments will be paid over to the service
providers. Furthermore, the amounts
to be paid in terms of the
relief sought are in any event covered by the transaction fees
generated by the eNaTIS System.
[75]
The
applicant has also tendered to agree to an arrangement whereby the
10- 15% of its management fee be paid into an escrow account
until
the final determination of the respondents’ current appeal to
the Constitutional Court. I am in agreement with
the applicant
that this arrangement should be implemented and I have made that part
of my order.
[76]
I will deal
in more detail with the counter-application herein below. Suffice to
point out that basis for the relief sought in the
counter-
application centres on allegations made by the DOT that the agreement
has been tainted by fraud and corruption and that,
in any event, the
DOT has now cancelled the agreement on the basis of the alleged fraud
and corruption. I interpose here to point
out that once the agreement
is terminated for any reason, the transfer management process will
have to be implemented. This
has never been implemented and
there is no indication that the DOT intends to implement these
proceedings now that it has, on its
own version, cancelled the
contract. This agreed process (as already pointed out) is mandated by
the original agreement and becomes
operative once the contract has
been terminated for any reason.
[77]
On behalf
of the respondents it was further contended that because of the
allegations of fraud and corruption, the DOT can no longer
be
expected to pay between R30 to R40 million per month over to the
applicant.
[78]
The
respondents also contended that, in light of the fact that the eNaTIS
System is the only source of income to the applicant,
there is no
realistic chance of the DOT ever recovering any of these amounts if
it is paid over to the applicant pursuant to a
damages claim.
[79]
The
applicant disputed the allegation that there is a basis for alleging
that the amounts paid by the DOT would not be able to be
recovered
through a damages claim. In this regard the applicant pointed out
that it pays out millions of rand in respect of salaries
and
third-party service providers and that the DOT has received full
value for these payments and will continue to receive full
value for
the payments when the DOT makes payment to the applicant.
[80]
I have
considered the submissions in respect of the section 18(3) of
application. I am of the view that the applicant has made out
a
proper case for the relief sought. Exceptional circumstances exist as
to why the payments should be made. It is of paramount
importance to
maintain the integrity of the system until such time as the system is
handed over to the DOT or to a third party.
This, as already
pointed out, can only be done in terms of the procedures provided for
in the agreement. Importantly, it
is for the DOT to commence
the process and it has not done so.
[81]
I am
further persuaded that the applicant will suffer irreparable harm
should the order not be granted. I am not persuaded that
the
respondent will suffer irreparable harm: The DOT continues to receive
value for these payments. A substantial percentage of
these payments
are also used to pay the various service providers. In order to take
care of some of the DOT’s concerns, I
have made it part of my
order that the management fee be paid over and held in an escrow
account.
[82]
The
application is therefore granted in terms of section 18(3) of the
Act. It is accordingly ordered that the SCA order will
operate
and be enforceable immediately in terms of section 18(3) of the Act
despite the delivery of an application for Leave to
Appeal of the SCA
order to the Constitutional Court.
Extension of the
status quo
order
[83]
On behalf
of the respondents it was submitted that there can in principle be no
objection against extending the
status
quo
order previously granted by the Full Bench (by consent) especially in
that no new factual developments have occurred in the intervening
two
months. The respondents further proposed to pay all outstanding
payments owed to service providers (3
rd
parties). It was further proposed that the applicant’s
management fee (that they have earned) be paid into escrow.
The
respondents made it clear that they did not required that the
applicant hand over the eNaTIS System back to them.
[84]
I am not
persuaded that there exists a basis upon which this court should
extend the order by the Full Bench. There certainly have
been new
factual developments: Firstly, when the Full Bench order was granted,
it was granted pending the outcome of the appeal
before the SCA. The
SCA has now handed down its judgment. I am therefore of the view that
this order is no longer extant having
been overtaken by the SCA order
and judgment. Secondly, when the order was granted by the Full Bench,
the hearing of the SCA was
a mere weeks away. A further four months
have now passed since that order was granted without the applicant
having received any
payments. Thirdly, the applicant is in a position
to indicate exactly what it is owed and I can see no reason why the
applicant
should not be paid. Fourthly, as I understand the
submissions, the respondents are merely willing to pay outstanding
amounts up
until the cancellation of the agreement. In this regard
two observations should be made: Firstly, the cancellation was
unilateral
and is not accepted by the applicant. Secondly, the
agreement between the parties is clear: Once an agreement comes to an
end for
whatever reason, the transfer management procedures come into
play. No such procedures have been invoked by the DOT. In this regard
I should briefly point out that the respondents argued that Schedule
15 does not apply in the event of the DOT cancelling the eNaTIS
contract based on its own default having corrupted the DOT officials
and the then Minister. There is no merit in this argument.
Schedule
15 is not capable of being terminated and becomes operative upon
cancellation of the contract for any reason.
[85]
The
application to extend the
status
quo
order of the Full Bench is therefore not granted.
Is the
counter-application urgent?
[86]
Before I
turn to the merits of the counter-application to discharge the
various High Court orders, it must first be determined whether
the
counter-application is urgent.
[87]
The
respondents brought this counter-application on an extremely urgent
basis and submitted on behalf of the applicant that the
counter-application was brought merely in an attempt to frustrate the
applicant’s present application.
[88]
It is trite
that the merits (and therefore also the issue of urgency) of a
counter-application stand on its own legs. See in this
regard
Luster Products Inc v
Magic Style Sales CC
:
[14]
“
The
present proceedings consist of separate applications, having a
certain overlap and being argued at a combined hearing, but separate
and independent applications nonetheless. The proper approach in
these circumstances is that while the respondent's version
must
be looked to insofar as the main application is concerned, the
reverse is the case with the counter-application.”
[15]
[89]
Urgency in
regard to the counter-application must therefore be dealt with on its
own merits. The principles governing urgent applications
are trite
and are set out in the well-known case of
Luna
Meubel Vervaardigers (Edms) Bpk v Makin And Another (t/a Makin's
Furniture Manufacturers)
.
[16]
They need not be restated.
[90]
On behalf
of the respondents it was submitted that the extension of the eNaTIS
agreement in 2010 came about as a result of fraud
and corruption
which renders the contract illegal and therefore invalid “
ex
tunc
”.
I have already referred to the fact that the respondent has, as a
result of these allegations of fraud and corruption,
indicated to the
applicant that they intend cancelling the extended contract and that
they are of the view that it would be reckless
to effect payment in
these circumstances.
[91]
In a letter
dated 24 December 2015 to the applicant, the Director-General of the
DOT informed the applicant of its intention to
cancel the contract.
In this letter the DOT relied on the fact that a provisional
indictment has been issued in terms of which
serious allegations of
fraud, corruption and money laundering are made. In response to this
letter the attorneys on behalf of the
applicant stated that they are
not in a position to respond to the letter of cancellation
particularly in light of the fact that
the letter does not set out
the factual or legal basis on which the contract is cancelled by the
DOT. More in particular, the letter
records that the DOT and its
officers have been aware of the interim indictment since at least 1
December 2015 and that, in any
event, the DOT and its officers have
been aware of the vast majority of the allegations underpinning the
indictment since at least
March 2015 and even before that since
February 2013 when the criminal investigations were initiated.
[92]
In response
to this letter, Mr Simelane (the Director: Corporate Legal) accepted
that the DOT relied on allegations of corruption
and that this “has
been a matter known to it at least since the exchange of affidavits
eight months ago”. Simelane
further conceded that that it
is “correct that some of the allegations surrounding the
unlawful extension of the eNaTIS contract
were known to the
Department, [but that] it is only after receipt of the provisional
indictment that the full basis of the charges
of corruption, fraud
and money laundering that your client faces were fully understood”.
[93]
In its
response the applicant dismissed these allegations and contended that
the picture painted by the respondents is entirely
false and
misleading. More in particular, it was submitted that the
issuing of the provisional indictments, including the
bringing of the
applicant before the criminal courts, were engineered by the
respondents to bolster its latest civil case against
the applicant
and that the whole process smacks of an abuse of state power. In this
regard the applicant referred the court to
the fact that the Minister
of Transport, the DOT and the fifth respondent (the Road Traffic
Management Corporation – “the
RTMC”) as well as the
legal representatives of the respondents have actively been applying
pressure on the prosecuting authorities
to issue the provisional
indictment and to make arrests despite the fact that the prosecuting
authorities have repeatedly stated
that they were not in a position
to issue or to act upon an indictment because material evidence is
missing; investigations have
not been completed; the available
evidence does not support the charges; and the fact that the
prosecuting authorities recognise
the real risk of civil liability on
the part of the State being sued if it acts prematurely in charging
various suspects. The applicant
also referred the court to a letter
dated 2 December 2015, in which the National Commander of the
Directorate for Priority Crime
Investigation Anti- corruption
Investigation recorded the following:
“
.. The main reason
for the requested arrest is a request by the legal representatives of
the Department of Transport and/or the
Road Traffic Management
Corporation to arrest. They requested the premature arrest in order
to use it as exceptional circumstances
as contemplated in
section
18(3)
of the
Superior Courts Act 10 of 2013
.”
[94]
The court
was also referred to an email from Lieutenant Colonel Cloete
addressed to Major General Zintle in which he stated that
he had no
intention to arrest any of the suspects without a warrant of arrest
and that the earliest that this can be obtained would
be in the
morning: “While the Criminal Procedure Act provides for an
arrest without a warrant, it is my submission that given
the
circumstances under which I am being compelled to execute an arrest,
that I will be complete the application for the issue
of warrants of
arrest and that a prosecutor must apply to a Magistrate for the issue
of such warrants.” Following this email,
Cloete also deposed to
an affidavit stating that the investigation was still ongoing and
that no suspects have yet been interviewed
and afforded an
opportunity to respond to the allegations against them. He concluded:
“There is a reasonable possibility
that if the suspects get an
opportunity to answer to the allegations against them, they may be
able to give an explanation that
may refute the allegations. Any such
explanation may be the subject of further investigations”.
[95]
In respect
of the allegations of fraud and corruption, the applicant submitted
that the evidence relied upon by the respondents
in the
counter-application are unsubstantiated and still the subject of
investigation. In this regard the court was referred to
the fact that
the prosecutor responsible for the matter had stated under oath that
the provisional indictment is subject to change;
that the matter is
still in the process of being investigated and that the proceedings
have been postponed to 20 July 2016. The
provisional indictment
sought to be relied upon by the respondents has therefore not been
finalised and remains the subject of
further investigation and
change. Furthermore, as already pointed out, the indictment refers to
a large number of relevant documents
that have up to date not been
furnished to the applicant.
[96]
The
applicant further categorically denies any impropriety and unlawful
conduct on its part and points out that the mere existence
of a
provisional indictment cannot form the basis for the non-enforcement
of the SCA order as well as the other High Court orders.
[97]
The
applicant further submitted that the counter-application is also in
breach of what the respondents themselves undertook under
oath in
this court when the matter served before Hughes, J: While being aware
of the factual basis for corruption and fraud as
set out in the
Schriven-affidavit, Mr Selepe on behalf of the respondents stated
that “[s]hould the respondents’ counter-application
[in
those proceedings] not prevail however, I, as the accounting officer
of the [DOT] undertake to ensure that all officials of
the Department
comply with the agreement and the Court order by this Honourable
Court”.
[98]
Having
briefly set out the nature of the counter-application, has a basis
been established on which the counter-application should
be heard on
an urgent basis?
[99]
Apart from
the unreliability of the evidence relied upon in the
counter-application and apart from the fact the applicant has not
yet
had sight of the facts underlying the indictment and more
importantly, apart from the fact that the investigation is still
ongoing, it appears from the facts before this court that it is not
so that the evidence of fraud and corruption “only came
to
light this month [December 2015] following the SIU’s
provisional indictment”. In this regard it is clear from the
facts that the respondents have been aware of most of the facts now
relied upon many months ago and in some instances even years
ago.
Furthermore, the respondents have not complied with the requirements
of the North Gauteng High Court Practice Directive in
respect of
urgent applications by failing to stipulate a reasonable time period
prior to 12H00 on the Thursday prior to the hearing
date for the
applicant to file an answering affidavit in the counter-application.
No provision was also made for the filing of
replying papers before
12H00 on Thursday at any time. In fact, the applicant has been
afforded a mere three court days to deal
with a very lengthy
counter-application which makes serious allegation of fraud and
corruption involving several participants who
are either not parties
to the application or who were never involved or who are no longer
employed by the applicant. Reference
is also made in the
counter-application to events dating from many years ago.
[100]
In this
regard the court was referred to the fact that concerns about the
lawfulness of the extension of the agreement has been
raised by Mr
Lesoalo (the Department’s Chief Financial Officer –
“Letsoalo”) at the time when Mahlalela
granted the
extension. At the time Mahlalela, however, overruled Letsoalo. After
Mahlaela vacated his position in 2013, Letsoale
opened a criminal
case against,
inter
alia
,
Mahlalela. He also appointed a forensic firm (Gobodo Forensic and
Investigative Accounting (Pty) Ltd - “Gobodo”) to
investigate the circumstances surrounding the extension. The Gobodo
report was finalised on 21 August 2014. Letsoalo also reported
this
matter to the SIU. The SIU was then tasked by the President to
investigate this alleged illegal extension. Ms
Scriven
(“Scriven”) was the Chief Forensic Investigator (of the
SIU). She had deposed to an affidavit as far back as
March 2015 (“the
Scriven affidavit). This affidavit is extensive and also served
before Huges, J. The Scriven affidavit also
form part of the appeal
record that served before the SCA.
[101]
In her
affidavit Scriven concluded that “the approval and extension of
the contract contravenes the mentioned legislative
requirements and
therefore renders all the expenditure incurred from 1 May 2010 to
date as irregular expenditure” and that
these allegations
suffice to support the case of corruption.
[102]
When the
matter served before Hughes, J the DOT relied upon this very
affidavit in opposing the application that served before her.
This
affidavit was also relied upon in challenging the very lawfulness of
the purported extension of the contract. The DOT also
sought
condonation for its failure in discharging its duty to act against
corruption. Hughes, J considered this application and
granted
condonation in the exceptional circumstances and accordingly
dismissed the applicant’s application and upheld the
DOT’s
counter-application.
[103]
In his
report dated 30 June 2015, the Auditor-General found that “the
approval and extension of the contract contravenes the
mentioned
legislative requirements and therefore renders all the expenditure
incurred from 1 May 2010 to date as irregular expenditure”.
[104]
I am not
persuaded that the respondents have made out a persuasive case for
the urgency under which the counter-application was
brought before
this court. I am persuaded that the respondents have been aware
of the majority of the facts underlying their
counter-application at
least since the Gobodo-report and the affidavit filed by Scriven.
[105]
I am also
in agreement with the submission that if the DOT had any belief in
the merits of the counter-application seeking to discharge
the
numerous High Court orders, it would have launched this application
many months ago. They cannot now on an extreme urgent basis
approach
this court in a counter- application for such a relief.
[106]
The
counter-application in which the respondents seek to set aside and/or
discharge various extant orders of this court is therefore
not urgent
and is accordingly struck form the roll.
[107]
Apart from
the fact that the counter-application is not urgent, it is in any
event clear from a reading of the counter-application
that oral
evidence and cross-examination in action proceedings is indicated in
this matter regarding the allegations of fraud and
corruption which
are strongly disputed. Furthermore, the respondents have not attached
to its papers any of the documentation which
are alleged to form the
basis of the provisional indictment. If these documents have been
provided, the applicant would in any
event be granted a reasonable
period to prepare a response thereto. The applicant simply is not in
a position to answer to these
allegations within the unreasonable
time afforded to the applicant and in the context of an application
brought on an extreme urgent
basis. The SIU alone has spent
over a year (since August 2014) investigating the allegations of
fraud and corruption. It
is therefore unreasonable to expect of the
applicant to respond to these serious allegations of fraud and
corruption in an abbreviated
time and without being placed in
possession of the specific documents on which the respondents rely.
In this regard the court was
also referred to the fact that the
applicant had already in April 2015 when the matter served before
Huges, J, requested that the
documents referred to in the affidavit
of Schriven be disclosed to the applicants. These documents have to
date not been disclosed
to the applicant.
Order:
1.
It is ordered that -
1.1
The
first respondent pay the amount of R 176,683,116.70 to the
applicant, within two days of this order, in satisfaction of
payment
certificates 96 - 101;
1.2
The
management fee earned by the applicant for services rendered must be
paid into an escrow account pending the final determination
of the
respondents’ current appeal to the Constitutional Court.
1.3
The tenth respondent, or his lawful delegate, approve, alternatively
process, all purchase requisition orders set out in annexure
"FM24"
to the supporting affidavit which supports this application, within
three days from the date of this order;
1.4
The fifth and eleventh respondents afford the applicant the full
benefit of the -
1.4.1
Lease agreement entered into by the fifth respondent in respect of
the premises the applicant currently occupies and operates
the eNaTIS
system from, and
1.4.2
LAN-Desk licence until the earlier of such licence expiring or the
applicant fully transferring the electronic national traffic
information system;
1.5
The first, second, sixth and tenth respondents, within one day of the
date of this Order, afford the applicant full access,
with no
restriction, to the eNaTIS Data / Disaster Recovery Centre, situated
at the State Information Technology Agency building,
459
Tsitsa Street, Erasmuskloof, Pretoria
.
2
.
Declaring -
2.1
T
he
first and second respondents to be in breach and willful contempt of:
2.1.1
Paragraphs 1.1 and 1.2 of the order by Mabuse, J issued under case
number 44095/2012 and handed down on 17 October 2012.
2.1.2
Paragraph 3 of the order by Strijdom, AJ issued under case number
44095/2012 and handed down on 26 March 2013.
2.1.3
Paragraphs 5 and 6 of the order by Fabricius, J issued under case
number 44095/2012 and handed down on 27 August 2013.
2.1.4
Paragraph 1 of the order by Rabie, J issued under case number
44095/2012 and handed down on 21 January 2014.
2.1.5
Paragraph 2(b) of the order of the Supreme Court of Appeal issued
under case number 792/2015 and handed down by Brand JA (Cachalia,
Majiedt, Saldulker, Mbha JJA concurring) on 2 December 2015.
2.2
T
he
fifth respondent to be in breach and willful contempt of:
2.2.1
Paragraphs 5 and 6 of the order by Fabricius, J.
2.3
T
he
tenth respondent to be in breach and willful contempt of:
2.3.1
Paragraph 1.1 of the order by Mabuse, J;
2.3.2
Paragraph 3 of the order by Strijdom, AJ;
2.3.3
Paragraphs 5 and 6 of the order by Fabricius, J;
2.3.4
Paragraph
4.1 of the order by Nkosi, J issued under case number 44095/2012 and
handed down on 5 November 2013.
2
.3.5
Paragraph 2(b)(ii) of the SCA Order;
3. It
is ordered that
-
3.1
The second respondent be committed to imprisonment for a period of 30
days.
3.2
The order in paragraph 3.1 above will not come into operation unless
there is a breach of the order in paragraph 1.1 above;
3.3 A
warrant of committal is to be issued by this Court on the same
papers, duly supplemented as necessary, if the first and/or
second
respondent breaches the order in paragraph 1.1 above.
4. It
is ordered
that
-
4.1
The tenth respondent be committed to imprisonment for a period of 30
days.
4.2
The order in paragraph 4.1 above will not come into operation unless
there is a breach of the order in paragraph 1.3 above;
4.3
A warrant of committal is to be issued by this Court on the same
papers, duly supplemented as necessary, if the tenth respondent
breaches the order in paragraph 1.3 above.
4.4
If the tenth respondent breaches the order in paragraph 1.3 above,
the Sheriff of this Court is authorised and directed to,
by his/her
signature, approve such of the outstanding PRQs which the tenth
respondent has failed to approve, alternatively process,
within the
time set forth in paragraph 1.3 above;
5. It is ordered
that
-
5.1
The eleventh respondent be committed to imprisonment for a period of
30 days.
5.2
The order in paragraph 5.1 above will not come into operation unless
there is a breach of the order in paragraph 1.4 above;
5.3
A warrant of committal is to be issued by this Court on the same
papers, duly supplemented as necessary, if the fifth and/or
eleventh
respondent breaches the order in paragraph 1.4 above;
6. It
is ordered that:
6.1
The second, sixth and tenth respondents be committed to imprisonment
for a period of 30 days.
6.2
The order in paragraph 6.1 above will not come into operation unless
there is a breach of the order in paragraph 1.5 above;
6.3
A warrant of committal is to be issued by this Court, on the same
papers, duly supplemented as necessary, if the first, second,
sixth
and/or tenth respondent breaches the order in paragraph 1.5 above.
7. It is ordered in terms
of
section 18(3)
of the
Superior Courts Act,
2013
that -
7.1
The SCA Order operate and be executed to the extent necessary until
the final determination of the present appeal in respect
of the SCA
judgment in the Constitutional Court.
8. The
counter-application is struck from the role for want of urgency.
9. It
is ordered that
the
first, second, fifth, sixth, tenth and eleventh respondents, jointly
and severally, the one paying the other to be absolved,
pay the costs
of this application, including the costs incurred in opposing the
counter-application, on the scale as between attorney
and own client,
including the costs of two counsel.
_________________________
AC BASSON
JUDGE OF THE HIGH
COURT
Appearances:
For the applicant: Adv.
AE Franklin (SC)
Adv. JPV McNally (SC)
Adv. AWT Rowan
Instructed by: Webber
Wentzel Attorneys
For the Respondents: Adv.
DN Unterhalter (SC)
Adv. JA Motepe (SC)
Adv. M Du Plessis
Adv. FB Pelser
For the first to third,
sixth and tenth Respondents
Instructed by: State
Attorney, Pretoria
For the fifth and
eleventh Respondents
Instructed by: Seleke
Attorneys
[1]
Act 102 of 1980.
[2]
(792/2015)
[2015] ZASCA
200
(2 December 2015). Coram: Brand, Cachalia, Majiedt, Saldulker,
Mbha JJA.
[3]
Act 10 of 2013.
[4]
“
Clause 24 DISPUTE RESOLUTION.
The parties accept that disputes may arise between them during the
course of this Agreement. Any
dispute which cannot be resolved
between the respective Project Managers of the Parties shall be
dealt with in accordance with
the provisions of Schedule 13 –
Dispute Resolution.”
[5]
2010 (2) SA 289 (SCA).
[6]
Footnotes omitted.
[7]
2006 (4) SA 326 (SCA).
[8]
2001 (2) SA p224 (E).
[9]
Ibid
at 229B – D.
[10]
2015 (5) SA 600 (CC).
[11]
Footnotes omitted.
[12]
2012 (9) BCLR
951
(CC).
[13]
2014 (3) SA 189 (GJ).
[14]
1997 (3) SA 13 (A).
[15]
Ibid
at 21G – H.
[16]
1977 (4) SA 135
(W).