Summary of Judgment

1. Introduction

The matter concerned an urgent application in the High Court (Gauteng Division, Pretoria) for an interim interdict pending the institution of a contemplated review application. The interim relief sought was aimed at preventing the implementation of the cancellation of Contract RT79-2015 for the provision of aero-medical services.

The applicants were the South African Red Cross and another entity reflected in the case title as the Air Mercy Service Trust. The first respondent was the National Minister of Finance, cited together with 12 other respondents connected to the National Treasury/Departmental procurement administration. The judgment records that the applicant entity was a registered trust and non-profit organisation acting through its trustees.

Procedurally, the urgent application was heard on 5 July 2016, when the court granted interim relief in terms of prayers 1 to 4 of the notice of motion, with an additional direction that the contemplated review application be filed and served within 15 days. Costs were reserved for determination by the court hearing the review. Owing to constraints on the urgent roll, the court furnished its reasons subsequently, in the present judgment dated 22 July 2016.

The general subject-matter of the dispute was the purported unilateral cancellation by the National Treasury of a public procurement contract on the basis that the original bid process was allegedly unlawful for failing to include a statutorily required criterion.

2. Material Facts

On 31 August 2015, the applicants’ bid to provide health-related services described as the “National Aero-Medical Service” for Mpumalanga was approved by the Bid Adjudication Committee and accepted by the relevant state authority (described in the judgment as the Department/National Treasury). The Mpumalanga award was added to the applicants’ already-existing contracts for similar services in Limpopo and KwaZulu-Natal.

Following acceptance of the contract, the applicants upgraded their operational capacity in order to meet the contractual obligations. This included acquiring additional resources such as two further helicopters, upgraded machinery, night vision equipment, and the employment of additional pilots and staff. The judgment emphasised the substantial cost implications of these upgrades, noting (as an example) that each helicopter cost R50 million.

The applicants then rendered services under the contract for approximately nine months. Thereafter, on 31 May 2016, the Third Respondent (identified as the Chief Director: Transversal Contracting of the Department of the National Treasury) addressed a letter to the applicants stating that the award of the bid was unlawful and that National Treasury would therefore not perpetuate an unlawful contract. The letter advised that National Treasury had decided to cancel the contract with effect from 30 days after receipt of the letter.

The asserted unlawfulness was linked to the allegation that, in the original bidding documentation, the Department failed to include reference to a legally required criterion concerning the “average number of hours”, said to arise under the Preferential Procurement Policy Framework Act 5 of 2000. The judgment records that this omission was discovered following complaints received by the Department and that the omission was relied upon as the basis for cancellation.

Certain aspects of the matter were placed in dispute, or at least treated by the court as contentious for purposes of the interim application. The respondents contended, among other things, that the contract was unlawful and a nullity, and that the cancellation was therefore justified; they also disputed whether the matter was urgent and whether the cancellation constituted reviewable administrative action. The court did not finally determine the legality of the underlying procurement process or the cancellation, noting instead that these were issues for the review court.

3. Legal Issues

The court was required to determine, for purposes of interim relief, whether the applicants had satisfied the requirements for an interim interdict restraining implementation of the cancellation pending review proceedings. This required an evaluative assessment of whether the applicants had demonstrated the necessary elements the court identified, including a clear right, balance of convenience, and the absence of an alternative remedy, together with the risk of irreparable harm if interim relief were refused.

In addition, the respondents raised preliminary and characterisation issues affecting whether interim relief should be granted at all. These included whether the applicant had been properly cited (given the contention that a trust is not a legal persona), whether the matter was genuinely urgent, and whether the dispute was properly framed as one of administrative-law review rather than merely the law of contract.

The dispute therefore involved a combination of procedural questions (citation and urgency), issues of legal characterisation (reviewability versus contract), and the application of established interim-interdict principles to the facts and predicted consequences.

4. Court’s Reasoning

On citation, the court accepted that the respondents had identified a valid technical point insofar as the applicant had initially been cited as a trust. However, the court granted an amendment to cure the citation, relying on the fact that the founding affidavit made clear that the deponent acted on behalf of the trustees and was authorised to represent them. On this basis, the court treated the applicant as having been represented by its trustees ab initio, regarding the amendment as a formality rather than a substantive defect undermining the proceedings.

On urgency, the court considered the respondents’ argument that the applicants had known of the cancellation from 31 May 2016 but only enrolled the matter more than a month later. While acknowledging the time lapse, the court took into account that the applicants had continued to correspond with the respondents up to 10 June, and that the application was served on 15 June. Having regard to “all relevant facts”, including that the respondents were an organ of state, the court held that the applicants had made out a case for urgency.

On the more substantive objections—namely whether the cancellation was reviewable administrative action and whether there were prospects of success given the alleged unlawfulness of the procurement process—the court treated these as contentious and debatable. The court indicated that these issues would ultimately require determination by the court hearing the review. In doing so, the court rejected the respondents’ contention that the review would only seek to correct the past, and accepted the applicants’ submission that a court would have to decide whether the agreement was lawful, with consequences for the parties’ future relationship in respect of the agreement.

Turning to the interim interdict requirements, the court framed the inquiry as whether the applicants had shown a clear right, that the balance of convenience favoured them, and that there was no alternative remedy. The court further identified the risk of irreparable harm as material to the decision. Without deciding the underlying legality, the court highlighted two “outstanding matters of concern” that informed the interim assessment.

First, the court emphasised that the cancellation was unilateral and followed from a self-admitted error on the part of the Department in the procurement process, leaving the lawfulness of the cancellation in question. Second, the court accepted that the impact of cancellation on the applicants would be serious and comprehensive, given the scale of the operational upgrades undertaken to perform the contract.

On these considerations, the court concluded that the balance of convenience clearly favoured the applicants, that the applicants lacked an alternative remedy, and that they would suffer irreparable harm if interim relief were refused. These findings justified maintaining the status quo pending the review proceedings.

5. Outcome and Relief

The court granted an interim interdict restraining the First Respondent from implementing the cancellation of Contract RT79-2015 pending a review application.

The order was made in terms of prayers 1, 2, 3 and 4 of the notice of motion, with an additional direction that the contemplated review application be filed and served within 15 days from the date of the order.

The issue of costs was reserved for decision by the court hearing the review application.

Cases Cited

No specific case names or report citations are recorded in the written reasons for judgment, although the court noted that counsel referred to several decisions in argument.

Legislation Cited

Preferential Procurement Policy Framework Act 5 of 2000.

Rules of Court Cited

No specific rules of court are cited in the written reasons for judgment.

Held

The court held that, notwithstanding technical objections to citation (which were cured by amendment) and challenges to urgency (which were rejected on the facts), the applicants met the requirements for interim interdictory relief pending review. The court accepted that the unilateral cancellation flowed from an admitted departmental error in the bid process and that the cancellation would have serious consequences for the applicants, creating a sufficient basis for interim protection pending the determination of the review, including the disputed questions of reviewability and legality.

LEGAL PRINCIPLES

An applicant seeking an interim interdict must satisfy the requirements identified by the court in this matter, namely the existence of a clear right, that the balance of convenience favours the grant of interim relief, and that there is no alternative remedy, with the court also considering whether refusal of relief would result in irreparable harm.

A defect in the citation of a trust as a litigant may be addressed by amendment where the papers show that the proceedings are in substance brought by and on behalf of the trustees, and where the deponent demonstrates authorisation to act for them, rendering the correction essentially formal.

An application may be treated as urgent notwithstanding some delay where the evidence shows ongoing engagement between the parties after the impugned decision, and where the overall circumstances (including the involvement of an organ of state) justify urgent enrolment.

Where the reviewability of an act (as administrative action) and the underlying lawfulness of a procurement process are contentious, a court determining interim relief may preserve the status quo without finally deciding those merits, particularly where the cancellation is unilateral and the harm from implementation would be substantial pending review.