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[2016] ZAGPPHC 211
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KGP Media Investments (Pty) Limited v Passenger Rail Agency of South Africa and Another (23826/16) [2016] ZAGPPHC 211 (19 April 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 23826/16
19/4/2016
Not
reportable
Not
of interest to other judges
In
the matter between:
KGP
MEDIA INVESTMENTS (PTY)
LIMITED
Applicant
and
PASSENGER
RAIL AGENCY OF SOUTH AFRICA
First
Respondent
PUBLIC
PROTECTOR
Second
Respondent
JUDGMENT
Tuchten
J
:
1.
The applicant, which trades as KG Media, applies for urgent relief.
The issue before me arises from an agreement between the
applicant
and the first respondent (Prasa), an organ of state which operates
passenger rail services within the Republic.
2.
The agreement between the parties was described by them as a
strategic partnership agreement. In law, however, it is nothing
but a
commercial agreement under which Prasa agreed to be locked in for a
period (currently for three years expressed to end on
31 March 2018)
to pay a substantial sum each month, presently R530 897,72, to the
applicant in return for a commitment on the part
of the applicant to
promote Prasa's services in a publication put out by the applicant
called Kwela Express.
3.
It is common cause that the conclusion of the agreement was not
preceded by any competitive bidding process as contemplated in
s 217
of the Constitution and the national legislation enacted to
provide a framework within which the policy prescribed
by s 217 must
be implemented. Section 217 itself reads as follows:
(1) When an organ of
state in the national, provincial or local sphere of government, or
any other institution identified in national
legislation, contracts
for goods or services, it must do so in accordance with a system
which is fair, equitable, transparent,
competitive and
cost-effective.
(2) Subsection (1) does
not prevent the organs of state or institutions referred to in that
subsection from implementing a procurement
policy providing for-
(a) categories of
preference inthe allocation of contracts; and
(b) the protection or
advancement of persons, or categories of persons, disadvantaged by
unfair discrimination.
(3) National legislation
must prescribe a framework within which the policy referred to in
subsection (2) must be implemented.
4.
A complaint in relation to this agreement was submitted to the Public
Protector, who proceeded to investigate the agreement and
other
alleged irregularities within Prasa. In August 2015, the Public
Protector provided a report in which she directed remedial
action.
Part of the remedial action so directed was that Prasa was required
to terminate the agreement on the ground that it was
void for failure
to comply with the procurement legislation to which I have referred.
5.
In a letter dated 10 March 2016, Prasa eventually complied with the
Public Protector's direction by telling the applicant that
it
regarded the agreement as unlawful and thus invalid from the outset.
6.
In the interim, the applicant, although well aware of the report of
the Public Protector and the remedial action directed by
the Public
Protector which affected the applicant, continued to render the
promotional services and invoice Prasa for those services
at a
monthly rate of R530 897,72.
7.
But even though the last payment received by the applicant under the
agreement was in September or October 2015 and the applicant
claims
that if it is not paid what it claims under the agreement it is
likely to go insolvent, the applicant took no legal proceedings
to
enforce its alleged rights but contented itself with negotiating in
an attempt to improve its position.
8.
Finally, by notice of motion dated 22 March 2016, precipitated by
Prasa's letter dated 10 March 2016 mentioned above, the applicant
launched the present application. It is opposed by Prasa. The Public
Protector abides.
9.
The main relief to be sought by the applicant is for a review in
which it will claim that what it describes as Prasa's decision
(pursuant to the findings of the Public Protector that Prasa was not
bound by the agreement) was unlawful and invalid or that the
alleged
termination of the agreement was invalid and that the Public
Protector's report relating to the agreement be set aside.
10.
The urgent interim relief, which is before me, is for interim
interdicts, pending the reviews described, directed at compelling
Prasa to pay the applicant the amounts invoiced and to be invoiced by
the applicant to Prasa, all of which the applicant claims
are due by
Prasa or will become due against the provision by the applicant of
the promotional services described in the agreement.
11.
The foundation for the review, as it appears from the papers which
served and oral argument which was made before me, is that
the
"decisions" to terminate the agreement amount to
administrative action, taken in each instance in violation of the
applicant's alleged right to be heard before decisions affecting it
were made. In addition, the applicant maintains that the competitive
bidding procurement legislation is not applicable on the facts of
this case.
12.
The answer to this, on behalf of Prasa, is that the applicant had no
right to be heard by the Public Protector and that Prasa's
decision
to terminate the agreement was purely commercial, as opposed to
administrative, action and thus did not require affording
the
applicant a hearing before it was made and that the competitive
bidding procurement legislation is indeed applicable.
13.
I am prepared to assume, in favour of the applicant, that it may have
grounds for a successful review although I do not think
that the
applicant has a strong case at this level. The question to which I
turn is whether, on this assumption, the applicant
has made out a
case for interim interdicts.
14.
The factors
influencing the grant or refusal of an interim interdict pending a
review in the constitutional era were set out by
my brother Fabricius
J in
Afrisake
NPC and Others v City of Tshwane and Others,
a
judgment delivered in this Division on 14 March 2014 under case no
74192/2014. As I cannot materially improve upon the exposition
of
Fabricius J, I shall quote the contents of paragraphs 8-10 of the
judgment:
[1]
These requirements, which
are often referred to as being "trite", conveniently appear
in the Law of South Africa, Second
Edition, Vol 11 at 411, the author
being the respected former Judge of Appeal, LTC Harms. They are also
dealt with, and their history,
in the Law and Practice of Interdicts,
CB Prest SC, Juta and Company 1996. As I have said, these
requirements are often regarded
as being "trite", but a
careful reading of the Case Law will lead one to the conclusion that
they are often misunderstood,
and, as in the case before me, not
applied to the facts correctly. I am not dealing with the
requirements for a final interdict.
One of the most important
considerations is that an interim interdict must be concerned with
the future only. It is not meant to
affect decisions already made.
See:
National
Treasury vs Opposition to Urban Tolling Alliance
...
[2]
I say that this is of the
utmost importance because it is interrelated to the second
requirement, and it is in this context in particular
where the
misapprehension occurs as to what must actually be shown. The
requisites for the right to claim an interim interdict
are:
a) A prima facie right,
though open to some doubt;
b) A well-grounded
apprehension of irreparable harm if the interim relief is not granted
and the ultimate relief is eventually granted;
c) That the balance of
convenience favours the granting of an interim interdict; and
d) That the applicant has
no other satisfactory remedy. None of these requisites must be judged
in isolation.
See:
Olympic Passenger
Service (Pty) Ltd vs Ramlagan
1957 2 SA 382
D at 383.
These requisites have
their origin, so it is often said, in
Setlogelo
vs Setlogelo
1914
AD 221
at 227. It is however clear from that judgment that the appeal
before the Court concerned the granting of a final interdict, where
the requirements are different. It was in the context of whether or
not an interim interdict could be obtained even though a clear
right
was not shown, that Innes JA dealt with the need to show irreparable
harm as set out by
Van
der Linden, Institutes,
(3,
1, 4, 7). Van der Linden mentioned this only in the case of where the
right relied upon was not clear, but was only
prima
facie
established,
if open to some doubt. In that instance the question would be whether
the continuance of the thing against which an
interdict is sought,
would cause irreparable injury to the applicant. The better course
would be, so it was said, to grant the
relief if the discontinuance
of the act complained of would not involve irreparable injury to the
other party. The whole topic
was again debated by
Clayden
J in Webster vs Mitchell
1948 1 SA 1186
W at 1189. The right can be
prima
facie
established
even if it is open to some doubt. Mere acceptance of the applicant's
allegations is insufficient, but the weighing-up
of the probabilities
of conflicting versions is not required. The proper approach is to
consider the facts as set out by the applicant
together with any
facts set out by the respondent which the applicant cannot dispute,
and to decide whether, with regard to the
inherent probabilities and
the ultimate onus, the applicant should on those facts obtain final
relief at the trial. The facts set
up in contradiction by the
respondent, should then be considered, and if they throw serious
doubt on the applicant's case, the
latter cannot succeed. In
Webster
vs Mitchell supra
the
test was actually whether the applicant could obtain final relief on
those facts. The mentioned qualification was introduced
by Goo/
vs
Minister of Justice
1955
2 SA 682
C at 687 to 688. The Full Bench of the Cape Provincial
Division agreed with the relevant analysis of the requirements in
Webster
vs Mitchell supra,
subject
to the qualification that the Court must decide, having applied the
proper approach to the facts that I have mentioned,
whether the
applicant should (not could) obtain final relief at the trial on
those facts. I may add at this stage, because I will
return to that
topic hereafter, that it was also held in that decision (at 689) that
where an interdict was sought against the
exercising of statutory
powers, it will only be exercised in exceptional circumstances, and
when a strong case is made out for
relief. The mentioned
qualification to the
Setlogelo-test,
if I
can call it that, as subsequently adapted by
Webster
vs Mitchell,
was
held to be "a handy and ready guide to the bench and
practitioners alike in the grants of interdicts in busy magistrates'
courts and high courts." The qualification in Goo/ was given
approval, and it was also said that the
Set/oge/o-test
had now
to be applied cognisant of the normative scheme and democratic
principles that underpin our Constitution.
[3]
This means in effect that when a Court considers whether to grant an
interim interdict it must do so in a way that promotes the
objects,
spirit and purport of the Constitution. For instance, if the right
asserted in the claim for an interim interdict is sourced
from the
Constitution it would be redundant to inquire whether that right
exists. As another example, the principle of the separation
of powers
must be applied in appropriate circumstances.
See:
National Treasury
vs Opposition to Urban Tolling Alliance
supra at 236 par. 44.
I have said that the
mentioned requisites are not to be judged in isolation and that they
interact. It is no doubt that for this
reason Moseneke DCJ in the
National Treasury
decision
supra
held at 237 par 50
that "under the Setlogelo-test the
prima facie
right a
claimant must establish is not merely a right to approach a Court
[in] order to review an administrative decision. It is
a right to
which, if not protected by an interdict, irreparable harm would
ensue. An interdict is meant to prevent future conduct
and not
decisions already made. Quite apart from the right to review and to
set aside impugned decisions, the applicant must demonstrate
a
prima
facie
right that is threatened by an impending or imminent
irreparable harm. The right to review the impugned decisions does not
require
any preservation
pendente lite."
The second
requisite of irreparable harm, must be looked at objectively, and the
question is whether a reasonable person, confronted
by the facts,
would apprehend the probability of harm; actual harm need not be
established upon a balance of probabilities. This
requisite in tum is
closely related to the question of the balance of convenience. This
is the third requisite and it must be shown
that the balance of
convenience favours the grant of the order. In this context the Court
must way the prejudice the applicant
will suffer if the interim
interdict is not granted, against the prejudice the respondent will
suffer if it is.
See:
Harms supra
par
406 and
Prest supra
at 73, where the learned author said, in
my view quite correctly, that a consideration of the balance of
convenience is often the
decisive factor in an application for an
interim interdict. He states that even where all the requirements for
a temporary interdict
appear to be present, it remains a
discretionary remedy and the exercise of the discretion ordinarily
turns on a balance of convenience.
I agree with that approach and the
view of Harms, JA in this context (at par 406), as well as the dictum
in
Olympic Passenger Service (Pty) Ltd supra
at 383. The
fourth requisite for the granting of an interim interdict is the
absence of another adequate remedy. This element is
also a factor in
the exercise of the Court's general discretion to grant or refuse an
interim interdict. Before turning to the
relevant facts and
submissions made by the parties, it is said (see
Harms supra
par.
408) that the Court always has a wide discretion to refuse an interim
interdict even if the requisites have been established.
This means
that the Court is entitled to have regard to a number of disparate
and incommensurable features in coming to a decision,
and not that
the Court has a free and unfettered discretion. The discretion is a
judicial one, which must be exercised according
to law and upon
established facts. I therefore do not agree with [counsel] that I
have a so called "overriding" discretion.
See:
Knox D'Arcy Ltd
vs Jamieson
[1996] ZASCA 58
;
1996 4 SA 348
A at 361 to 362 and
Hix Networking
Technologies
CC
vs System Publishers (Pty) Ltd
1997 1 SA
391
A at 401. The exercise of the discretion must therefore be
related to the requisites for the interim order sought, and not to
any
unrelated features.
15.
It is by now trite that the applicant is not entitled to an interdict
to protect its right to review. That right is afforded
under the
Constitution. What the applicant actually seeks to protect is its
right to be paid under the agreement.
16.
There is no suggestion that Prasa will not be able to pay any amount
which it might in due course be ordered to pay the applicant.
The
applicant's case is that if it is not paid pursuant to its monthly
invoices pending the final adjudication of the dispute,
it will go
insolvent.
17.
Assuming this to be so, I find that the applicant has fallen short of
making a case for interim interdicts on two grounds. Firstly,
the
applicant has a perfectly adequate alternative remedy: it can
institute action against Prasa for what it claims is owed to
it under
the agreement. It was suggested in argument that Prasa did not put up
facts on the strength of which Prasa might resist
the applicant's
claims for payment. I do not agree. But even if this were so, an
action, culminating (so the applicant hopes) in
an order against
Prasa for payment, will provide adequate protection of the
applicant's alleged rights. The fact that the applicant
has delayed
enforcing this obvious remedy for more than six months does not
improve the applicant's position in this regard.
18.
Secondly, the balance of convenience is strongly against the
applicant. It is not disputed that if I order payment in the interim
and the applicant is ultimately unsuccessful in the normal course,
the applicant will probably be unable to repay such interim
payments.
Counsel for the applicant argued that this prejudice would be
eliminated because Prasa would receive the promotional
services
contemplated in the agreement. I disagree. There is nothing in the
papers to suggest that Prasa needs all the services
contemplated in
the agreement or that the value the parties apparently placed on
these services in the agreement is truly cost
effective. Nothing
prevents Prasa from concluding further contracts, in accordance with
the law as Prasa understands it to be,
with the applicant for
specific services.
19.
It follows that the application for urgent relief cannot succeed.
This is in essence a commercial dispute and costs must therefore
follow the result.
20.
The final matter with which I must deal relates to a
counter-application brought by Prasa for an order declaring that the
agreement
was unlawful and null and void
ab initio.
I was
asked to strike it from the roll for want of urgency. No grounds of
urgency were expressly advanced in relation to the
counter-application.
However, in light of the conclusions to which I
have come above, I do not reach the counter-application. I think that
the proper
order is simply to remove the counter-application from the
roll with leave to Prasa to enrol it in the normal course, should it
so wish.
21.
I make the following order:
1. The application for
the relief in Part A of the notice of motion is dismissed.
2. The applicant must pay
the first respondent's costs, which are to include the costs
consequent upon the employment by the first
respondent of both senior
and junior counsel.
3. The
counter-application is removed from the roll. The first respondent is
granted leave to re-enrol the counter-application for
hearing in the
normal course.
____________________
NB
Tuchten
Judge
of the High Court
18
April 2016
KGP_Prasa23826.16
[1]
Paragraph numbering omitted.
[2]
National Treasury and Others v Opposition ta Urban Tolling Alliance
and Others
2012 6 SA 223
CC para 50
[3]
Fabricius J was quoting from and referring to National Treasury and
Others v Opposition to Urban Tolling Alliance and Others,
supra,
para 45