About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2000
>>
[2000] ZASCA 62
|
|
Transnet Ltd. v Goodman Brothers (Pty) Ltd (373/98) [2000] ZASCA 62; 2001 (1) SA 853 (SCA); 2001 (2) BCLR 176 (SCA) (9 November 2000)
CASE NO.373/98
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
In the matter between
Transnet Limited Appellant
and
Goodman Brothers (Pty) Ltd Respondent
BEFORE: HEFER ADCJ, HARMS, OLIVIER, SCHUTZ JJA and
MTHIYANE AJA
HEARD: 19 SEPTEMBER 2000
DELIVERED: 9 NOVEMBER 2000
Duty
to give reasons to unsuccessful tenderer under the Constitution -
administrative action - right or interest to obtain reasons.
W P SCHUTZ
_____________________________________________________________
J U D G M E N T
________________________________________________________________
SCHUTZ JA:
[1] This appeal raises the question whether the
Constitution obliges the
appellant, Transnet Ltd (“Transnet”), once a
part of government as the South African Railways and Harbours, now a
limited
company owned by the government, to give reasons to an
unsuccessful tenderer who asks for reasons, why another has been
preferred
over him. The matter came before Blieden J, whose decision
in favour of such an unsuccessful tenderer, the respondent, Goodman
Brothers (Pty) Ltd (“Goodman”), is reported as
Goodman
Bros (Pty) Ltd v Transnet Ltd
1998 (4) SA 989
(W). The detailed
facts may be gleaned from this report.
[2] The case before us can be decided on s 33 of the
1996 Constitution. Pending the passing of legislation by the national
legislature
such as is envisaged by subsections 32(2) and 33(3), item
23 of Schedule 6 provides for an interim reading of subsections 33(1)
and (2). As the tenders with which we are concerned were dealt with
before any such legislation had been passed, the interim reading
has
application. It reads:
“
Every person has the right to
-
(a) lawful administrative action where any of their
rights or interests is affected or threatened;
(b) procedurally fair administrative action where any of
their rights or legitimate expectations is affected or threatened;
(c) be furnished with reasons in writing for
administrative action which affects any of their rights or interests
unless the reasons
for that action have been public; and
(d) administrative action which is justifiable in
relation to the reasons given for it where any of their rights is
affected or
threatened.”
[3] It is (c) particularly with which we are concerned.
As it falls within the Bill of Rights (Chapter 2) it is one of the
cornerstones
of our democracy and is limitable only to the extent
allowed by s 36.
[4] Three matters have to be decided in order to
determine whether (c) entitles Goodman to reasons. They are: first,
whether calling
for and adjudicating tenders constituted
“administrative action”, secondly, whether Goodman had a
“right”
or an “interest”, and thirdly,
whether, if he did, the right or interest was “affected”.
Section 39 enjoins
that when interpreting the Bill of Rights a court
must promote the values that underlie an “open” and
democratic society
based on human dignity, equality and freedom.
[5] Before dealing with each of these points it is
useful to look at the background against which the Constitution is
set and which
explains many of its provisions. Baxter
Administrative
Law
(1989) at 741 sums up the position as it was:
“
In the absence of statutory
authority there is no general duty upon public authorities to give
reasons. Although the state of the
law has been widely criticized, no
general legislative provision has been enacted to correct the
situation.”
The value of giving reasons is set out by the same
author at 228, as follows:
“
In the first place, a duty to
give reasons entails a duty to
rationalize
the decision. Reasons therefore help to structure the exercise of
discretion, and the necessity of explaining
why
a decision is
reached requires one to address one’s mind to the decisional
referents which ought to be taken into account.
Secondly, furnishing
reasons satisfies an important desire on the part of the affected
individual to know why a decision was reached.
This is not only fair:
it is also conducive to public confidence in the administrative
decision-making process. Thirdly - and probably
a major reason for
the reluctance to give reasons - rational criticism of a decision may
only be made when the reasons for it are
known. This subjects the
administration to public scrutiny and it also provides an important
basis for appeal or review. Finally,
reasons may serve a genuine
educative purpose, for example where an applicant has been refused on
grounds which he is able to correct
for the purpose of future
applications.”
[6] The Constitution has plainly set out to remedy the
previous position and without even dealing with particular words or
resorting
to authority, to my mind a straightforward reading of the
words leads to the inevitable conclusion that the former deficiency
has
been remedied in a case such as is before us. If it is necessary
to resort to s 39 (which I do not think it is), then I do not
consider that an “open . . . society” countenances the
type of secrecy in the tender process, such as Transnet contends
is
permitted by the Constitution.
[7] Turning to the first question, whether
administrative action was involved, it has already been held in this
court that the State
Tender Board’s handling of tenders for
transport service for the government, constituted administrative
action - in
Umfolozi Transport (Edms) Bpk v Minister van Vervoer
en Andere
[1997] ZASCA 8
;
[1997] 2 All SA 548
(SCA) at 552 j - 553 a. Howie JA
pointed out that the steps that had preceded the conclusion of a
contract were purely administrative
actions and decisions by
officials, whilst in addition public money was being spent by a
public body in the public interest. Naturally,
said Howie JA, in such
a case the subject is entitled to a just and reasonable procedure. I
agree entirely. Moreover, the same
considerations apply to Transnet.
[8] I do not think that anything can be made of the fact
that Transnet is now a limited company. The government still owns all
the
shares in it and thus has ultimate control. It still provides a
general service to the public, even though it is now competition-
and
profit-orientated. It still has a near - monopoly over rail
transport.
[9] It was presumably for reasons like these that
counsel for Transnet conceded that some of its actions amount to acts
of administration.
But a distinction was sought to be drawn between
different kinds of action. In this connection reliance was placed on
the judgment
of the Constitutional Court in
President of the
Republic of South Africa and Others v South African Rugby Football
Union and Others
2000 (1) SA 1
(CC) at paras 140-141, pp 66-67.
There it was stated that in determining whether an act is an
administrative act the emphasis should
be on the function rather than
the functionary, not on the arm of government to which the actor
belongs but on the nature of the
power exercised. From this it
followed that the exercise of some of the powers of a member of the
executive (the President in that
case) amounted to administrative
action whereas exercises of other powers did not. This reasoning was
sought to be extrapolated
to the procurement activities of Transnet.
Some of its actions are administrative. Others are not. Thus, so
proceeded the argument,
when Transnet invites tenders for the supply
of locomotives, its acts administratively. But when it invites
tenders for toilet
paper, or, as in this case, gold watches, it does
not. I fail to see how such a distinction is to be drawn,
particularly where,
as in this case, the purchase of watches is
clearly incidental to the exercise of Transnet’s general
powers. The gold watches
are bought so that they may be used to
secure the loyalty of employees, much as salaries are paid to secure
their services. For
the reasons given I am of the view that the
actions of Transnet in calling for and adjudicating tenders
constituted administrative
action, whatever contractual arrangements
may have been attendant upon it.
[10] Turning to the second question, the “right”
or “interest”, Transnet relied on the unreported judgment
of Heher J in
SA Metal Machinery Co Ltd v Transnet Ltd
(WLD 9
March 1998), in which the learned judge held that a person in a
position such as Goodman was, was “effectively a stranger
to
the tender process” (the passage is more fully quoted at 996H -
997A of Blieden J’s judgment) and therefore had
no protectable
right or interest entitling him to just administrative action. If
that were correct, every applicant for a permit
would likewise have
no right or interest. By contrast with the decision of Heher J, in
Aquafund Pty Ltd v Premier of the Province of the Western Cape
1997 (7) BCLR 907
(C) Traverso J identified the right (at 913 I) as
the right to obtain the information which the tenderer reasonably
required in
order to enable him to determine whether his right to
lawful administrative action provided for in the interim Constitution
had
been violated. For instance, reasons given may tell a tenderer
that his goods did not comply with the specification. He, knowing
that they did comply, would then be able to take the matter further.
Without reasons he might be without remedy.
[11] Another valid approach is that the tenderer has the
rights to lawful and procedurally fair administrative action provided
for
in par (a) and (b). The rejection of a tender affects these
rights and they are protected by par (c).
[12] As to whether Goodman’s rights were
“affected” (the third question), I do not think there is
any doubt about
it if the first two questions are settled adversely
to Transnet in the manner already expressed. Without reasons Goodman
is deprived
of the opportunity, to which he is entitled, to consider
further action.
[13] Further matters considered in the court below have
fallen by the wayside. As will be seen at pp 997H - 998D and 1001F,
Transnet
unsuccessfully contended
a quo
that, failing all
else, it could rely on a waiver of rights clause in the tender
conditions. During argument in this court that
contention was
dropped (wisely I would think).
[14] Although s 217 of the Constitution was relied upon
by Goodman as an alternative basis for relief, it is not necessary to
say
anything about that section, and therefore also not necessary to
decide whether Transnet is an “organ of State”.
[15] There was no cross-appeal against the court
a
quo’s
finding (at 999 C - 1001 E) that Goodman was not
entitled to further information of the various tenders.
[16] Finally, I would suggest that once Transnet gets
into the habit of giving reasons, when asked to do so, it will find
the exercise
a healthful one.
[17] The appeal is dismissed with costs.
W P SCHUTZ
JUDGE OF APPEAL
CONCUR
HEFER
ADCJ
HARMS
JA
MTHIYANE
AJA
PJJ OLIVIER
JA
OLIVIER
JA
[1]
The judgment of the court
a quo
which is the subject matter of
this appeal has been reported as
Goodman Bros (Pty) Ltd v
Transnet
Limited
1998 (4) SA 989
(W). That
judgment was the last in a series of three judgments, all concerning
the appellant, and all raising similar and difficult
issues of
constitutional importance. A divergence of opinion has emerged from
these judgments. The two other judgments are
ABBM Printing and
Publishing (Pty) Limited v Transnet Limited
1998 (2) SA 109
(W), also at
1997 (10) BCLR 1429
(W) (“
ABBM
”;
references are to the judgment as reported in the
SA Law Reports),
and
SA Metal Machinery Co Limited v Transnet Limited
,
an unreported judgment of the Witwatersrand Local Division, case no
30 825 / 97, delivered on 22 March 1998 (“
SA Metal
”).
[2]
The appellant (“Transnet”) observes the old custom of
rewarding its long-serving employees with expensive watches.
Jewellers and suppliers of watches are invited biennially to submit
tenders for the supply of suitable watches. Since 1994 the
respondent (“Goodman”) had supplied Transnet with these
watches pursuant to successful tenders awarded to it. That
Transnet
had no cause for complaint in respect of the performance by Goodman
of its obligations, is not disputed.
[3]
On 26 August 1997 Transnet issued a written invitation to interested
parties to tender for the supply such watches to one of its
business
units, Spoornet, for a period of two years, commencing on 1 January
1998 and terminating on 31 December 1999.
[4]
Apart from the conditions of tender (whose significance I address
below), the written invitation to tender provided specifications
of
the wrist watches sought.
[5]
The respondent and six other tenderers submitted their written
tenders timeously.
[6]
The tender was awarded by Transnet’s tender board to F Bacher &
Company (Pty) Limited (“Bacher”), which undertook
to
supply
Pierre Cardin
wrist watches.
[7]
In January 1998 Goodman, acting through its attorney, addressed a
letter to Transnet, pointing out that for four years it had supplied
Spoornet with watches, and requesting Transnet to furnish it with the
reasons for its decision to grant the tender to Bacher and
also with
a comprehensive list of documents relating to the tender and the
procedure followed by Transnet in awarding the tender.
[8]
The letter requesting the said reasons and documentation sets out
the
basis of the entitlement relied upon by Goodman. The relevant parts
read as follows:
“
2 Our client
wishes to establish that the tender procedure, the process of tender
adjudication, and the outcome of such adjudication,
has not infringed
our client’s rights or legitimate expectation that the Transnet
Tender Board and its functionaries, would
fairly, responsibly and
honestly consider all tenders submitted and would properly apply its
mind in arriving at a decision regarding
the award of the tenders.
3.1 In terms of Section 33 of the
Constitution of the Republic of South Africa Act No. 108 of 1996
(“The Constitution’)
our client is entitled to
administrative action that is ‘lawful, reasonable and
procedurally fair’.
3.2 Transnet is clearly an organ of
state as defined in the Constitution since it is a functionary or
institution ‘exercising
a public power or performing a public
function in terms of any legislation’.
3.3 The Transnet Tender Board, and
other persons involved in the Tender adjudication process exercised
administrative powers on
behalf of an organ of state, namely
Transnet.
3.4 It is accordingly our client’s
contention that the process of consideration of tenders constitutes
administrative action
and that our client is therefore entitled to
all information it may reasonably require to establish whether or not
its right to
lawful administrative action has been violated.
4 The administrative actions by the
Transnet Tender Board which is an administrative body has adversely
affected our client’s
rights and, our client is accordingly
entitled in terms of Section 33 (2) of the Constitution to written
reasons for the decisions
of the Tender Board and hereby asks for the
same.”
[9]
To this request, Mr D A Dludlu, the Chairman of the Transnet
Tender
Board, replied in a letter dated 3 February 1998:
“
4 I further
wish to let you know that it is not the policy of Transnet to provide
reasons for its decisions to unsuccessful tenderers
(see the
provision of clause 10 (a) of the conditions of tender (Form U S 7)
that your client has agreed to be bound by).”
[10]
Clause 10 (a) of the conditions of tender, to which Mr Dludlu
referred, reads as follows:
“
The Company
does not bind itself to accept the lowest or any tender/quotation nor
will it assign any reason for the rejection of
a tender/quotation.”
[11]
Apparently to make doubly sure that Transnet’s attitude was not
misunderstood, the following letter was written on a letterhead
of
Transnet by the Chief Executive of Promat, a division of Transnet, on
4 February 1998 and delivered to Goodman’s attorney:
“
Herewith
acknowledgment of your correspondence. As the purchasing support
business unit of Transnet, Promat concurs with the views
expressed by
the Chairman of the Tender Board, correspondence dated 3 February
1998. In addition, kindly note that Transnet is
in control of its own
destiny hence it reserves the right to award business, within the
ambit of the highest standards of ethical
code, to whom it deems
appropriate. The Company is under
no
obligation to furnish reasons for non award.”
(My
correction)
[12]
Thereafter Goodman launched the application now under
consideration. Repeating its allegations that it was entitled, by
virtue
of the provisions of sections 33 and
/
or 217 of the
Constitution to relief against Transnet, it claimed orders in the
following terms:
“
1 Declaring
that the words ‘nor will it assign any reason for the rejection
of a tender/quotation ... ‘ contained in
the Respondent’s
document styled ‘General Condition of Promat Tenders, Contracts
and Orders’ to be in conflict
with the provisions of Section 33
and/or Section 217 of the Constitution of the Republic of South
Africa, Act No. 108 of 1996 and
declaring further that the provision
containing those words is to that extent invalid.
2 Ordering the Respondent to provide
the Applicant with written reasons for the rejection of the
Applicant’s tender for the
supply and delivery of wrist-watches
to the Respondent in terms of Tender No. 1080 97276, such reasons to
be provided within the
time period stipulated by this Honourable
Court.
3 Directing the Respondent to provide
to the Applicant within the time period stipulated by this Honourable
Court, with the following:
3.1 Copies of all Tenders received by
the Respondent in response to Tender enquiry No. 1080 97276;
3.2 A schedule setting out the dates
upon which each and every Tender was received by the Respondent.
3.3 Copies of all documentation
relating to the establishment and operation of the Respondent’s
Tender Board.
3.4 Full details in writing detailing
how the members of the Respondent’s Tender Board are selected,
how the Tender Board
is constituted and the procedures to be followed
by the Tender Board in adjudicating upon and selecting tenders.
3.5 Copies of all reports, minutes and
other documentation of whatever nature received by the Respondent’s
Tender Board, which
were submitted in response to Tender enquiry No.
1080 97276.
3.6 Copies of all contracts concluded
by the Respondent with any successful party or parties in response to
tender enquiry No. 1080
97276.
3.7 Copies of all brochures and all
technical specifications received by the Respondent in respect of the
wrist-watches which were
included in the successful tender under
tender No. 1080 97276.
4 Directing that the Respondent shall
pay the costs of this Application on the attorney and client scale.”
[13]
This application was met with an opposing affidavit by one Leon
Raath, the chief executive of Promat, on behalf of Transnet. This
affidavit raised the following points:
(i) The other tenderers should have
been joined in the proceedings;
(ii) Transnet is not an organ of
state, subject to administrative scrutiny;
(iii) In calling for and awarding the
tenders now under consideration, Transnet did not perform an
administrative act;
(iv) Goodman has no right, interest or
legitimate expectation to be protected, but that even if it had such
a right, interest or
expectation, this has not been threatened by
Transnet in any way;
(v) That clause 10 (a) of the tender
conditions amounts to a waiver of any right that Goodman might have
had to be furnished with
the reasons requested by it.
[14]
The matter came before Blieden J. He granted prayers 1 and 2 of
the
application, with costs. He refused prayer 3,
i e
that the
documents requested by Goodman be delivered to it. The learned judge
later granted Transnet leave to appeal to this Court
against
paragraphs 1 and 2 of his order, as well as the costs order. There is
no cross-appeal by Goodman against the refusal by
Blieden J of the
said prayer 3. The correctness of such refusal is, therefore, not in
issue in this Court.
[15]
In its application Goodman relied on certain Constitutional
grounds
for
the relief claimed, and it also sought to question the award of the
tender to the successful tenderer on the factual ground
that the
watches to be supplied by the latter did not meet the written
specifications set out in the invitation to tender. The
court
a
quo
rejected the latter ground of attack, and there is no
cross-appeal against that decision. Nothing more needs to be said
concerning
this aspect.
[16]
The two remaining issues before us are therefore :
(a) Whether Goodman was entitled to
the declaratory order issued by the court
a quo
that the words
“... nor will it assign any reason for the rejection of a
tender / quotation ...” in Transnet’s
tender document are
in conflict with the provisions of section 33 and
/
or section
217 of the Constitution of the Republic of South Africa Act 108 of
1996. (“the Constitution”); and
(b) Whether Goodman was entitled to an
order that Transnet is to provide it with written reasons for the
rejection of the tender
now under discussion.
[17]
Logically, the first issue to be addressed is whether Transnet is
obliged to furnish Goodman with the reasons for its decision
not to
accept Goodman’s tender and to award the tender to Bacher. Only
if the answer is in the affirmative, and the legal
basis of such
obligation has been determined, does the waiver issue become
relevant.
Transnet’s
obligation to furnish Goodman with the reasons for its said decision
.
[18]
In a nutshell, the dispute between the parties on this issue is this
:
Goodman
says that Transnet, in calling for tenders and deciding to accept a
particular tender, performed an administrative act to
which the
Constitution is applicable. Goodman avers that the Constitution in
such a case obliges the functionary to give reasons
for its decision
if requested to do so by an unsuccessful tenderer. Transnet, on the
other hand, says it acted in a private, commercial
capacity and took
part in ordinary contractual activities, to which the Constitution
does not apply; it denies that it performed
an administrative act.
[19]
Can Goodman base an entitlement to the reasons now under discussion
on the provisions of the Constitution?
[20]
Goodman based its entitlement to be furnished with the said reasons
on two separate sections of the Constitution,
viz
sections 33
(1) and (2) and section 217.
By
virtue of item 23 (2) (b) of Schedule 6 of the Constitution, sections
33 (1) and (2) must be deemed to read as follows:
“
Every
person has the right to -
(a) lawful administrative action
where any of their rights or interests is affected or threatened;
(b) procedurally fair
administrative action where any of their rights or legitimate
expectations is affected or threatened;
(c) be furnished with reasons in
writing for administrative action which affects any of their rights
or interests unless the reasons
for that action have been made
public; and
(d) administrative action which is
justifiable in relation to the reasons given for it where any of
their rights is affected or
threatened.”
(
En
passant
it can be noted that sections 33(1) and (2) can only be
taken to read as set out above until the legislation envisaged in
sections
32 (2) and 33 (3) of the new Constitution becomes operative.
The envisaged legislation was passed by Parliament and published on
3
February 2000 as the
Promotion of Administrative Justice Act 3 of
2000
. It comes into operation on a date yet to be fixed by the
President by proclamation in the
Gazette
- see
section 11.
The
appeal, in any event, must be decided on the law as it stood when the
Court
a quo
delivered its judgment.)
[21]
Section 217 (1) of the Constitution reads as follows :
“
...
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.”
[22]
It is useful to emphasize the differences between the deemed
sections
33 (1) and (2) on the one hand and section 217 (1) on the other. The
former provisions
apply to every person
, giving to him or her
a
right to lawful and procedurally fair administrative action
whether a contract or other legal obligation has come into
existence or not; the latter provision places an obligation on “
...
an organ of state
in the national, provincial or local
sphere of government
, or any other institution identified in
national legislation
”, and can be relied upon by every
person with whom the organ of state or other institution therein
mentioned “
contracts for goods or services
”. It
may well be that the words “
contracts for goods and
services
” must be given a wide meaning, similar to
“negotiates for”
etc
(contrast
Fundstrust
(Pty) Ltd (In liquidation) v Van Deventer
1997 (1) SA 710
(A)
at 726 B - D; 735 C - D and 735 I - 736 C) but even in that sense
section 217 (1) is more limited and specific than sections
33 (1) and
(2).
Are
sections 33 (1) and (2) applicable?
[23]
In order to succeed on the basis of sections 33 (1) and (2) of the
Constitution,
Goodman has to convince this Court that Transnet, in calling for
tenders and awarding the tender now under discussion,
performed an
administrative action or administrative actions as envisaged by the
said provisions. Goodman argued that while the
precise extent of what
is encompassed by the term “administrative action” is a
matter of some uncertainty, in the context
of the present appeal it
is a non-issue. This is so, it argued, because this Court has already
held - in
Umfolozi Transport (Edms) Bpk v Minister van Vervoer
en Andere
[1997] ZASCA 8
;
[1997] 2 All SA 548
A at 552 i - 553 c
- that the
invitation for, receipt of and the appraisal of tenders, constitutes
an administrative action for the purposes of section
24 of the
Interim Constitution and thus for the purposes of section 33 of the
Constitution.
[24]
The judgment in
Umfolozi Transport
is not necessarily
applicable
because
in that case it was clear that the second respondent, the State
Tender Board, which was instituted by the State Tender Board
Act 86
of 1968, acted as the agent of the State (see 551 a and 554 a of the
report). It is in that context that Howie JA said the
following at
552 i of the report:
“
Wat die
tweede en derde betoogspunte betref, is daar gedurende die aanhoor
van die appèl die vraag geopper, oor die antwoord
waarop die
advokate dit nie eens was nie, of administratiefregtelike beginsels
op die onderhawige aangeleentheid van toepassing
is. Ek het geen
twyfel nie dat die antwoord bevestigend moet wees. Wat
kontraksluiting hier voorafgegaan het, behels suiwer administratiewe
handeling en beslissings aan die kant van die betrokke amptenary, en
veral die Raad, en boonop in ’n sfeer wat met die besteding
van
openbare gelde in die openbare belang deur ’n openbare liggaam
te doen het. Natuurlik is die onderdaan in hierdie omstandighede
op
’n regverdige en billike prosedure geregtig.
Dit dien daarop gelet te word dat as
daardie vraag deur die Hof
a quo
beslis moes word dit die
bepalings van art 187, saamgelees met art 24, van die tussentydse
Grondwet, Wet 200 van 1993, sou moes
afgedwing het, welke bepalings
ten tyde van die Raad se optrede reeds gegeld het en wat by oorweging
van tenders waar dienste vir
die Staat verkry word, toepassing van
administratiefregtelike beginsels vereis. (Vergelyk in hierdie
verband
Claude Neon Ltd v Germiston City Council and another
1995 (3) SA 710
(W) te 720 H - 721 B, en
GNH Office Automation
CC and another v Provincial Tender Board and others
1996 (9)
BCLR 1144
(Tk).”
(In
the context of possible bias on the part of the State Tender Board,
Howie JA later in his judgment discussed the question whether
the
Board could be seen as part of the “staatsowerheid”, or
as a “staatsliggaam”. He inclined to the view
that it was
not; in terms of section 4 of the relevant Act the Board did act on
behalf of the State but there was no control of
the Board by the
State and half of the Board members were not civil servants. But for
the purposes of the judgment Howie JA did
not decide the point,
assuming in favour of the appellant that the Board was a
“staatsinstelling”.)
[25]
The decisions relied on by Howie JA in the said judgment make it
clear
that the learned judge, when deciding that the award of a tender was
an administrative action had in mind instances of administrative
acts
performed by
public officials
. In the case of
Claude
Neon Ltd v Germiston City Council and Another
1995 (3) SA 710
(W) the act under consideration was an undertaking given by one
Verhage in his capacity as secretary of the Germiston City Council.
It is clear that Verhage was acting as a public official. In the case
of
Jeeva and Others v Receiver of Revenue, Port Elizabeth, and
Others
1995 (2) SA 433
(SE) the conduct of an enquiry by a
commission appointed in terms of sections 417 and 418 of the
Companies Act 61 of 1973, authorised
by the Master of the Supreme
Court and held under the machinery of the Companies Act, came under
scrutiny. Jones J held that such
an enquiry was quasi-judicial in
nature. It therefore amounted to administrative action for the
purposes of section 24 of the interim
Constitution (the present
sections 33 (1) and (2) - see the report at 443 I - J). The action
was performed by a public official,
viz
a commissioner
appointed by the Master of the Supreme Court
[26]
Transnet argues that the present case is clearly distinguishable
from
Umfolozi Transport, Claude Neon
and
Jeeva
,
because in inviting, considering and awarding the tenders now under
discussion it acted in a purely private capacity and not in
the
sphere of expending public funds in the public interest as a public
body - see the formula used by Howie J in
Umfolozi
at
552 i.
[27]
I must, therefore, deal with the question : what is meant by
“
administrative
action” in sections 33 (1) and (2) of the Constitution? The
Constitution does not define this term.
[28]
Administrative law is defined by David Foulkes as
“
... the law
relating to public administration. It is concerned with the legal
forms and constitutional status of public authorities;
with their
powers and duties and with the procedures followed in exercising
them; with their legal relationships with one another,
with the
public and with their employees; and with the wide range of
institutions, both internal and external to themselves, which
seek,
in varied ways, to control their activities.”
(
Administrative
Law
, 8
th
ed, Butterworths, London 1995 at
1)
or,
simply, by Jones and Thompson as
“
... the law
relating to the administration of Government”
(in
Garner’s
Administrative Law
, 8
th
ed,
Butterworths, London, 1996 at 4 - 5. See
cf
P P Graig,
Administrative Law
, 2
nd
ed, Sweet and Maxwell,
London, 1989 at 3
et seq
.)
[29]
This is also the view taken by South African writers. Baxter
(
Administrative
Law
, Juta and Co, Cape Town, 1984, reprint 1989 at 2) sees the
administrative law as that branch of public law which regulates the
legal relations of public authorities, whether with private
individuals and organisations, or with other public authorities. (See
also M Wiechers,
Administratiefreg
, 2
nd
ed,
Butterworths 1984 at 2; F Venter,
Die afbakening van staats- en
administratiefreg
1977 TSAR 237
at 241; Boulle, Harris and
Hoexter,
Constitutional and Administrative Law : Basic Principles
,
Juta & Co Cape Town, 1080 at 80; Y Burns,
Administrative Law
under the 1996 Constitution
, Butterworths, Durban, 1998 at 41
et
seq
)
[30]
Consistent with the object of the administrative law, the
essential
characteristics of the concept of
administrative action
are
seen as the exercise of a public (
i e
governmental) function
by a public authority or official affecting the rights of or
legitimate expectations of or involving legal
consequences to the
individual (see generally Baxter,
Administrative Law
, 344
et
seq;
Wiechers,
Administratiefreg
, 96
et seq,
especially 100 :
”
...
administratiewe
handelinge
... d w s handelinge wat deur die staatsadministrasie verrig word”;
Boulle, Harris and Hoexter,
Constitutional
and Administrative Law
,
88
et
seq
)
[31]
The identification of an administrative action in contrast to an act
regulated by private law, has become more difficult with the
increasing use by the state of private law institutions, notably
contract, to perform its duties. This takes place by privatisation,
delegation, outsourcing,
etc
(see A Cockrell “
Can you
paradigm?” - Another perspective on the public law / private
law divide?
1993
Acta Juridica
227
; Yvonne Burns,
Government contracts and the public / private law divide
, vol
13, no 2
S A Public Law
, 1998 at 234
et seq
)
[32]
The present case highlights the problem just mentioned. Before 1989,
the public transport services were conducted under control
of a
central South African government department as the South African
Transport Services. In 1989, however, parliament passed the
Legal
Succession to the South African Transport Services Act 9 of 1989
(“the Succession Act”), which created the appellant,
Transnet Limited, as a public company. Hence the argument by Transnet
that, because of the said privatisation, it is not an organ
of state,
nor a part of the public administration, nor does it perform a
governmental function nor does it exercise a public power
or
function: in asking for and awarding the tender now under
consideration it avers it did not perform an administrative act or
action. This is the argument which Goodman has to meet.
[33]
Before the introduction of the interim Constitution it was not
necessary
to define the concept of “administrative action” with
precision. By and large, the
criteria
have usually been that
an administrative action requires a decision (and resultant action)
taken in the exercise of a public power
or the performance of a
public function, affecting the rights, interests or legitimate
expectations of others (see
Administrator, Transvaal and Others
v Zenzile and Others
1991 (1) SA 21
(A) at 33 J - 36 A;
Administrator, Natal and Another v Sibiya and Another
[1992] ZASCA 115
;
1992 (4) SA 532
(A) at 538 E - 539 E). Following these, and English
cases, it was held in
Toerien en ’n Ander v De Villiers
NO en ’n Ander
1995 (2) SA 879
(K) that the dismissal
of a university employee by the Council of the University of
Stellenbosch was subject to review in terms
of the administrative
law.
[34]
The legislative concept of ‘administrative action’ has
now been
introduced
in section 24 of the interim Constitution and has been retained in
section 33 of the Constitution of 1996. Our courts
have not yet
defined the parameters of the concept. No doubt it will be defined
and redefined in future. A final definition is
not possible, nor
called for, in this judgment. The following has so far emerged from
recent decisions:
34.1
Administrative law, which
occupies a special place in our jurisprudence, is an incident of the
separation of powers under which
courts regulate and control
the
exercise of public power
by the other branches of government -
Pharmaceutical Manufacturers Association of SA and Others : In
re : Ex Parte Application of President of the RSA and Others
[2000] ZACC 1
;
2000 (3) BCLR 241
(CC) at 260
[45]
, 263 [51], 270 [79] and 272 [85]
per Chaskalson P.
34.2
Administrative law and the
power of the courts to pronounce on the validity of the exercise of
public power by the executive and
other functionaries are not limited
to administrative actions as envisaged in section 33. So, for
example, it was held that the
power of the President to promulgate a
statute was not an ‘administrative action’, yet it is
subject to constitutional
review in the wider sense of that term -
Pharmaceutical Manufacturers
,
supra
, at 270 [79]
and 271 [82]
et seq.
34.3
The question relevant to
section 33 of the Constitution is not whether the action is performed
by a member of the executive arm
of government, but whether the task
itself is administrative or not. The answer is to be found by an
analysis of
the nature of the power being exercised
-
President of the RSA and Others v SARFU and Others
1999
(10) BCLR 1059
CC at 1119 [141].
34.4
The implementation of
legislation is an administrative responsibility, and will ordinarily
constitute ‘administrative action’
within the meaning of
section 33 -
SARFU
,
supra
, at 111 [142].
34.5
What has to be taken in
consideration is,
inter alia
, the source of the power
exercised, as well as
“
...
the nature of the power, its subject matter, whether it involves the
exercise of a public duty, and how closely it is related
on the one
hand to policy matters which are not administrative, and on the other
to the implementation of legislation, which is.”
(See
SARFU
,
supra
,
at 1120 [143.])
34.6
Whilst section 24 of the
interim Constitution - presently sections 33 (1) and (2) of the
Constitution - applies to the exercise
of powers delegated by an
elected local government council to its functionaries, it is not
applicable to the by laws made by the
council itself: the latter is a
legislative , not an administrative act. -
Fedsure Life
Assurance Ltd and Others v Greater Johannesburg Transitional
Metropolitan Council
and Others
,
[1998] ZACC 17
;
1999 (1) SA
374
(CC) at 394
[41]
and [42]; see also
Ernst and Young and
Others v Beinash and Others
,
1999 (1) SA 1114
(W) at 1145 F -
H.
[35]
Earlier I referred to the
Promotion of Administrative Justice Act
3 of
2000
,
which has not yet been promulgated. The definition of ‘administrative
action’ in
section 1
(i) is instructive. It reads :
“
(i)
‘
administrative
action
’
means
any decision taken, or any failure to take a decision , by -
an organ of state,
when -
exercising a power in
terms of the Constitution or a provincial constitution; or
exercising a public
power or performing a public function in terms of any legislation;
or
a natural or juristic
person, other than an organ of state, when exercising a public power
or performing a public function in
terms of an empowering provision,
which adversely affects the rights
of any person and which has a
direct, external legal effect, but
does not include -
... “
For
present purposes, section 1 (i) (b) is noteworthy. It gives
recognition to the fact that administrative action can be taken
by a
person, other than an organ of state,
when exercising a public
power
or
performing a public function in terms of an
empowering provision, etc
.
[36]
I can now proceed to consider whether Transnet’s decision to
request
tenders, the consideration thereof and the decision to award the
tender amounted to ‘administrative action’
for the
purpose of sections 33 (1) and (2) of the Constitution. I do so on
the basis that, irrespective of whether Transnet is
an organ of state
or a juristic person other than an organ of state, the threshold
requirement is that it exercised
a public power or performed a
public function
.
[37]
From the history of the creation of Transnet, as it appears from the
provisions of the Succession Act, one can only deduce that
all the
powers and functions of the former S A Transport Services were
transferred to Transnet, who is now obliged to exercise
the said
powers and perform the said functions. In doing so, Transnet merely
stepped into the shoes of the SA Transport Services.
Like the latter,
it is performing a public service and function and exercising all the
powers of a government department. Furthermore,
the State is the only
member and shareholder of Transnet
(section
2 (2)); the entire commercial enterprise of the State (“previously
existing as the South African Transport Services”)
including
all assets, liabilities, rights and obligations were transferred to
Transnet (section 3 (2)); the State is the only member
and
shareholder of Transnet and it controls Transnet; an employee of
Transnet is deemed to be an employee of the State (section
9 (2));
Transnet is obliged to provide a service that is in the public
interest (section 15); the Minister of Transport is entitled
to make
regulations on a large range of matters relating to the control and
functioning of Transnet (section 30).
[38]
From the aforegoing it follows that Transnet, generally speaking, is
exercising the public powers and performing the public functions,
in
terms of the Succession Act, of or on behalf of a government
department. Once again, generally speaking, one would say that
in
doing so it is performing administrative actions for the purposes of
section 33 of the Constitution.
But,
as the decision in
SARFU
shows, one must be especially
careful of generalisations in this area. Some acts of a functionary
may amount to administrative
actions, others may not. The question is
whether the particular decisions now under consideration,
i e
in connection with the tender, are administrative actions.
[39]
In my view, this question must be decided in favour of Goodman. The
power exercised by Transnet arose from the legislation under
discussion and directly related to affairs not confined to the
internal affairs of Transnet. Public funds and eventually state
responsibility are involved.
[40]
It was further argued on behalf of Transnet that even if its
conduct
amounted
to an administrative action Goodman was not entitled to relief under
section 33 of the Constitution, because none of its
rights, interests
or legitimate expectations, as required by subsections (a), (b) or
(c) were infringed or threatened. Which rights,
interests or
legitimate expectations of Goodman, Transnet questioned, were
affected or threatened by its conduct?
[41]
One of the most fundamental rights guaranteed in our Bill of
Rights
appears
in section 9. It is the right to equality: “Everyone is equal
before the law and has the right to equal protection
and benefit of
the law ... ”, (subsection (1)). “Equality includes the
full and equal enjoyment of all rights and freedoms
... ”
(subsection (2)). Subsection (4) further provides that “No
person may unfairly discriminate directly or indirectly
against
anyone on one or more ...” of the grounds set out in subsection
(3).
[42]
One need hardly look further for a more obvious fundamental right
which
justifies the application of section 33 of the Constitution to the
present case. The right to equal treatment pervades the
whole field
of administrative law, where the opportunity for nepotism and unfair
discrimination lurks in every dark corner. How
can such right be
protected other than by insisting that reasons be given for an
adverse decision? It is cynical to say to an individual
: you have a
constitutional right to equal treatment, but you are not allowed to
know whether you have been treated equally. The
right to be furnished
with reasons for an administrative decision is the bulwark of the
right to just administrative action.
[43]
In my view, Goodman was entitled to the protection of section 33
of
the
Constitution. I agree, therefore, with the remarks of Traverso J in
Aquafund (Pty) Ltd v Premier of the Province of the Western
Cape
,
supra
at 915 I - 916 F about the nature of
rights that must be protected. I also agree with the view expressed
by Schwartzman J in
ABBM Printing and Publishing (Pty) Ltd v
Transnet Ltd
,
supra
at par [21] that the applicant in
that case, as does the appellant in the present case, required the
information sought in order
to decide whether it had any claim for
relief against the respondent. Conversely, I disagree with the
opposite view taken by Heher
J in an unreported decision in
SA
Metal Machinery Co Limited v Transnet Limited
(case no 30825
/ 97 of 22 March 1998 of the Witwatersrand Local Division) in which
he is reported as stating:
“
On the facts
of this case, the applicant falls into that category of tenderers who
prepare and submit their offers entirely at their
own risk and who
cannot fall back on the protection of special conditions. Such a
tenderer, absent special facts such as the undertaking
in
Claude
Neon
case
supra
,
does not even have a legitimate expectation that his tender will be
considered at all. ... In these circumstances, why should
his
‘interest’ in the tender adjudication process be regarded
as deserving a protection under section 33 of the Constitution?
That
section is not concerned with the public interest element of the
administrative action, for example transparency or absence
of
corruption, but in the claim of an individual to lawful treatment.
Unless and until his tender is accepted, a person in the
position of
the applicant is effectively a stranger to the tender process and
therefore to the administrative action. The applicant’s
interest, such as it may be, does not in my view possess the
qualities which merit constitutional protection against unlawful
administrative action such as to bring it within section 33 (1). For
the same reason the award of a tender in the circumstances
under
consideration to Interline Investment Corporation does not entitle
the applicant to reasons, either for the granting of a
tender or for
its own lack of success in that regard.”
For
the reasons set out above, such an approach is wrong and inimical.
[44]
In the light of the conclusion hereinbefore reached, it is not
necessary to decide whether section 217 (1) of the Constitution would
also give Transnet a basis for the relief claimed by it, and whether
Transnet is an organ of state,
etc
.
Waiver
[45]
As in the
ABBM
-case,
supra
, Transnet relied
on clause 10 (a) of its
tender
conditions as a basis for the argument that Goodman Brothers had
waived its constitutional rights to be furnished with reasons.
This
argument was rejected in
ABBM
at 118 par [17.3]
[46]
Counsel for Transnet, not relying on any specific authority,
submitted that there is no general rule that the rights set out in
the Bill of Rights cannot be waived. Reference was made to the right
to remain silent (see 35 (1) (a) of the 1996 Constitution)
in
criminal matters, which, he said, can be waived. Some rights, counsel
conceded, cannot be waived,
e.g.
the right to life. The right
to just administrative action, including the right to be furnished
with reasons, so counsel argued,
is not of such fundamental nature or
importance that it cannot be waived.
[47]
In my view, the correct approach to the question of waiver of
fundamental rights is to adhere strictly to the provisions of section
36 (1) of the Constitution. It provides that:
“
The
rights in the Bill of Rights may be limited only in terms of law of
general application to the extent ...”
etc.
[48]
A waiver of a right is a limitation thereof. One must be careful not
to allow all forms of waiver, estoppel, acquiescence,
etc
to
undermine the fundamental rights guaranteed in the Bill of Rights. In
my view, a strict interpretation of section 36 (1) is
indicated.
Transnet has not made out a case that the waiver it relies upon is
warranted by a law of general application.
[49]
It follows that the appeal must be dismissed with costs.
P
J J OLIVIER JA