Brief Summary

Equality — Tender review — Applicant sought to review and set aside the disqualification of its tender by the First Respondent for provincial road upgrades, alleging the disqualification procedure was unconstitutional and discriminatory — Respondents contended the court lacked jurisdiction to entertain the application — Court held that it had jurisdiction to review the administrative decision and found the disqualification procedure inconsistent with section 217 of the Constitution, thus unlawful and discriminatory under the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an application brought in the Equality Court (constituted at the Bhisho High Court) in terms of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (“the Act”). Although the notice of motion originally sought urgent interim relief in Part A, the judgment dealt only with Part B, which sought final relief of a review and declaratory nature.

The applicant was Manong & Associates (Pty) Ltd, a private company that had submitted a tender to the Eastern Cape provincial department responsible for roads and transport. The first respondent was the Department of Transport in the Eastern Cape Province (referred to in the judgment as the Department of Roads and Transport of the Eastern Cape). The second respondent was the National Treasury, established under the Public Finance Management Act 1 of 1999, and responsible (according to the judgment) for prescribing tender regulations and practice notices.

Procedurally, the matter had a “long and checkered history”. The urgent application for interim relief in Part A was refused, and subsequent attempts to appeal (including an application for leave to appeal and a petition to the Supreme Court of Appeal) were also refused. The proceedings then continued on Part B, which was argued on 13 June 2007. Before that hearing, a hearing contemplated by section 20(3)(a) of the Act was convened and completed, although the judgment noted the unusual sequence that the urgent Equality Court proceedings had already been entertained before the section 20(3)(a) enquiry occurred.

The general subject matter of the dispute concerned the applicant’s disqualification from a provincial procurement process for professional engineering services in relation to roadworks projects. The relief sought was framed as both (i) a review of the disqualification and any award made to other tenderers, and (ii) declaratory relief challenging the procurement evaluation procedure (described in the tender “Bid Rules”) as inconsistent with section 217 of the Constitution of the Republic of South Africa, 1996, and as unfair discrimination under the Act.

2. Material Facts

During June 2006 the first respondent published an advertisement calling for tenders for professional engineering services for the construction of five roadworks-related projects. The applicant submitted its tender response on 20 July 2006.

The applicant alleged that it was subsequently disqualified on the basis of a perceived failure to meet functionality requirements and/or non-compliance with tender procedures. The applicant denied that it had failed to meet the relevant functionality requirements.

A critical feature of the case, as characterised by the court, was that the applicant’s complaint was directed not at misconduct by the tender committee in applying the prescribed procedures, but at the lawfulness and constitutional acceptability of the prescribed procedure itself. The procurement procedures were set out in the invitation to tender and bid notice, with the Bid Rules identifying relevant legislative foundations (including the Preferential Procurement Policy Framework Act 5 of 2000, the Public Finance Management Act 1 of 1999 (and another statute identified as Act 19 of 1999 in the Bid Rules), the Broad-Based Black Economic Empowerment Act 53 of 2003, and the Department’s supply chain management manual). The applicant attacked the procedure described in clause 24 of the Bid Rules as producing an outcome inconsistent with section 217 of the Constitution, and it also sought to characterise the disqualification procedure as unfair discrimination under the Act.

As to the litigation conduct, the court recorded that the respondents did not file heads of argument and had not pleaded to the applicant’s allegations. The respondents filed notices purporting to be under Rule 6(5)(d)(iii) of the Uniform Rules of Court; the earlier notice (30 August 2006) did not properly set out a question of law, and a later notice (stamped 12 June 2007, served on the eve of the hearing) raised points of law including that the Equality Court lacked jurisdiction to entertain the review. At the hearing, the respondents also advanced the contention that the Equality Court did not have jurisdiction to decide issues of constitutionality, a point raised as an additional jurisdictional objection.

3. Legal Issues

The central legal questions the court was required to determine were jurisdictional in nature.

The first question was whether the Equality Court had jurisdiction to entertain an application that was, in substance, a review of an administrative/procurement decision by an organ of state, including the power to “review, correct and set aside” the decision to disqualify the applicant and to set aside any tender award to another party.

The second question was whether the Equality Court had jurisdiction to decide constitutional validity issues implicated by the applicant’s attack on the tender evaluation procedure, including the contention that clause 24 of the Bid Rules (or alternatively clause 9.4 of the National Treasury practice note underpinning them) was inconsistent with section 217 of the Constitution.

Although the papers also raised issues about equality and discrimination, the judgment treated those matters as dependent on, and intertwined with, the jurisdictional questions. The dispute therefore primarily concerned questions of law (the scope of the Equality Court’s statutory and constitutional powers), and the application of constitutional and procedural principles to the relief sought (review and constitutional declarators). The court approached the matter on the basis that if it upheld the jurisdictional objections, the matter would end without reaching the merits.

4. Court’s Reasoning

The court began by treating the respondents’ jurisdictional objections as dispositive and therefore convenient to decide first, especially given that the merits stood uncontested on the papers (the respondents having not pleaded to the applicant’s allegations).

In analysing jurisdiction, the court located the Equality Court within its statutory framework. It described the Equality Court as a “special court” created by Parliament to advance constitutional values linked to equality and dignity, but emphasised that its powers are those granted by the Act. The court relied on section 21(1) of the Act as defining the Equality Court’s mandate as determining whether unfair discrimination, hate speech or harassment has taken place, and section 21(2) as listing remedies related to those determinations. The court contrasted this with section 169 of the Constitution, which confers jurisdiction on the High Court to decide constitutional matters (subject to exclusions), and noted that the Act did not “directly” empower the Equality Court to decide constitutional matters.

The court accepted that, in practical terms, determining whether the application of the Bid Rules amounted to discrimination would require “delving into the essence of the rules”. It reasoned that this would entail an unavoidable enquiry into whether the rules “strain the constitution”, because unconstitutionality and discrimination were closely connected in the way the claim was framed. Notwithstanding that interrelationship, the court considered that the Equality Court did not appear to have been empowered to review, correct or set aside the Bid Rules, nor to review the administrative procurement decision itself.

The court then addressed “review” as a legal concept. It referred to the classic articulation of the three meanings of review in Johannesburg Consolidated Investment Company v Johannesburg Town Council 1903 TS 111, distinguishing review of inferior courts, review of statutory/public body action involving illegality or irregularity, and broader legislatively conferred review powers. The court treated the applicant’s case as most closely resembling review of public body action (the second category), but held that this did not assist because the present proceedings were not brought under the conventional review machinery applicable in the High Court.

In that respect, the court reasoned that review proceedings are governed by Rule 53 of the Uniform Rules of Court, which regulates review in the High Court. In the court’s view, even if the applicant’s complaint could properly be advanced as a review, it would need to be pursued via Rule 53 in the High Court, and the Equality Court lacked jurisdiction to grant such review relief.

The court reinforced the constitutional character of administrative-law review by relying on Pharmaceutical Manufacturers Association of SA and Another: In Re Ex Parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC). It extracted from that decision the proposition that judicial control of public power through review is “and always has been” a constitutional matter, and that common-law review principles have been subsumed under the Constitution. This supported the court’s conclusion that what the applicant sought—review of the exercise of public power—entailed constitutional adjudication beyond what the Equality Court was empowered to do.

The applicant argued that because the Equality Court was constituted at the level of the High Court, it had the ordinary jurisdiction of the High Court, including review and constitutional jurisdiction. The court rejected this, drawing a distinction between the High Court as a court of general jurisdiction and the Equality Court as a specialised forum with a delimited mandate, even when a High Court judge presides. The court referred to section 16(2) of the Act, emphasising that presiding in the Equality Court depends on special designation and training, and treated this as underscoring the institutional separateness of the Equality Court from the High Court’s ordinary jurisdiction.

The applicant also relied on Minister of Environment Affairs and Tourism v George and Others 2007 (3) SCA 62 to argue for “double jurisdiction” and concurrent competence. The court distinguished that authority on the basis that it concerned parallel proceedings in the High Court and an Equality Court sitting at High Court level, and it did not address whether an Equality Court had the power to grant the kind of review relief sought here. The court therefore found that the “double jurisdiction” reasoning did not resolve the core issue, namely whether this Equality Court was empowered to review the administrative decision and decide constitutional validity challenges to the procurement rules.

The court further rejected reliance on section 172 of the Constitution, holding (on the facts as framed) that the applicant was not attacking the constitutional validity of an Act of Parliament or a provincial Act, but rather tender rules and related instruments, and that section 172 did not establish the Equality Court’s competence to decide the matter.

Having found a lack of jurisdiction, the court nonetheless added that even if it had review jurisdiction, the application would still fail on the review standard described in the case law it cited. It endorsed the summary in Durbsinvest (Pty) Ltd v Town and Regional Planning Commission, Kwa-Zulu Natal and Others 2001 (4) 103 (N), which—drawing from Pharmaceutical Manufacturers—describes review as a constitutional enquiry centred on whether the decision is objectively rationally related to the purpose for which the power was given, and whether it was taken bona fide and within authority. The court also cited Mkhatshwa v Mkhatshwa and Another 2002 (3) SA 441 (T). The court observed that the applicant’s complaint was not that the tender committee acted irregularly or unlawfully in applying the rules, and this observation counted against the prospects of review relief on the traditional grounds of irregularity or illegality.

On that reasoning, the court upheld the respondents’ points of law and concluded that the Equality Court lacked jurisdiction to entertain the review and constitutional challenges as formulated, with the result that the application had to be dismissed.

5. Outcome and Relief

The application was dismissed on the basis that the Equality Court lacked jurisdiction to entertain what was essentially an application for review of an administrative/procurement decision and to decide associated constitutional challenges.

The court ordered that costs follow the result, and accordingly dismissed the application with costs.

Cases Cited

Johannesburg Consolidated Investment Company v Johannesburg Town Council 1903 TS 111.

Pharmaceutical Manufacturers Association of SA and Another: In Re Ex Parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC).

Minister of Environment Affairs and Tourism v George and Others 2007 (3) SCA 62.

Durbsinvest (Pty) Ltd v Town and Regional Planning Commission, Kwa-Zulu Natal and Others 2001 (4) 103 (N).

Mkhatshwa v Mkhatshwa and Another 2002 (3) SA 441 (T).

Legislation Cited

Constitution of the Republic of South Africa, 1996 (sections 169, 172, 217).

Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (sections 2, 16(2), 20(3)(a), 21, 23(5), 30).

Public Finance Management Act 1 of 1999.

Preferential Procurement Policy Framework Act 5 of 2000.

Broad-Based Black Economic Empowerment Act 53 of 2003.

Rules of Court Cited

Uniform Rules of Court, Rule 6(5)(d)(iii).

Uniform Rules of Court, Rule 53.

Held

The court held that the Equality Court’s jurisdiction is confined to that conferred by the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000, and it does not extend to granting review relief aimed at “reviewing, correcting and setting aside” an administrative procurement decision of an organ of state.

The court further held that the relief sought would require determination of constitutional validity and administrative-law review issues that fall within the competence of the High Court exercising its ordinary jurisdiction (and governed procedurally by Rule 53), rather than the Equality Court. The fact that the Equality Court was constituted at the level of the High Court did not mean it automatically possessed the High Court’s full ordinary jurisdiction while sitting as an Equality Court.

On that basis, the application was dismissed for lack of jurisdiction, with costs.

LEGAL PRINCIPLES

The Equality Court is a specialised statutory forum whose powers are limited to those conferred by the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000. Its mandate under section 21 is directed at determining whether unfair discrimination, hate speech, or harassment has occurred and granting remedies linked to those determinations; it is not, without more, a general review court.

Judicial review of the exercise of public power constitutes a constitutional enquiry. Following Pharmaceutical Manufacturers Association of SA and Another: In Re Ex Parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC), common-law review principles are subsumed under the Constitution, and constitutional and common-law review concepts are intertwined rather than separate.

Review of administrative decisions in the High Court is procedurally governed by Uniform Rule 53. Where a litigant seeks to set aside an administrative decision by an organ of state (including in procurement), the relief ordinarily falls to be pursued through the High Court’s review jurisdiction rather than through Equality Court proceedings, unless the empowering statute clearly provides otherwise.

In review proceedings concerning executive/administrative decisions, the court’s focus includes whether the decision is objectively rationally related to the purpose for which the power was conferred, and a court may not interfere merely because it disagrees with the decision if it was taken bona fide and within authority, as summarised in Durbsinvest (Pty) Ltd v Town and Regional Planning Commission, Kwa-Zulu Natal and Others 2001 (4) 103 (N).

Manong & Associates (Pty) Ltd v Department of Transport in the Eastern Cape Province and Another (928/06) [2007] ZAEQC 1; 2008 (6) SA 423 (Eqc) (18 October 2007)