IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, MTHATHA)
CASE NO: 4104/2023
In the matter between:
MKHONTO WETHU TRADING (PTY) LTD t/a
ECO CHEMICAL SOLUTIONS Applicant
and
KING HINTSA TVET COLLEGE 1st Respondent
MINISTER OF HIGHER EDUCATION
AND TRAINING 2nd Respondent
T.E NTLANGANO N.O. 3rd Respondent
MS N BALFOUR N.O. 4th Respondent
__________________________________________________________________
JUDGMENT
__________________________________________________________________
RUSI J
[1] Where does the interplay between public and private law begin and end?
When and how, do contractual terms bear on public law duties, and when and how
do they yield to them?1 This is the question at the heart of the present dispute.
[2] On 23 August 2022, and by means of an appointment letter, the applicant
was awarded by the first and second respondents a contract for the provision of
hygiene services at first respondent (the College). This, after the applicant
successfully traversed the College’s tender bid process under tender number KHC
BID 01/2022 (the tender or contract). The duration of the tender was 36 months.
[3] The applicant’s quotation, with pricing schedule, which it submitted as part
of the tender documents, amounted to R1 148 811.64. This amount is stated in the
quotation as ‘totals per annum’ representing ‘annual rentals and services and
annual deep cleaning services.’ The applicant was awarded the tender for the
contract price of R1 148 811.64, and it was required by the College to enter into a
service level agreement.
[4] It was in the service level agreement that the further terms and conditions of
the intended contract between the applicant and the College would be
encapsulated. The contract price of R1 148 811.64, as was ostensibly offered and
accepted between the applicant and the College was subsequently stipulated in the
service level agreement as the total amount of the contract for the period of 3
years.
[5] By a letter dated 30 November 2022, the College cancelled the applicant’s
appointment and later re -advertised the invitation for tenders for the provision of
the same services under the same tender bid number. Subsequent to the
cancellation and re-advertisement, the applicant launched the present application in
1 Cora Hoexter: A matter of feel? Public Powers and Functions in South Africa, p 168.
terms of section 7 of the Promotion of Administrative Justice Act 3 of 2000
(PAJA), in which it seeks the review of the College’s decision in cancelling the
tender award, and its decision in re-advertising the tender.
[6] In tandem with this relief, the applicant sought a substitution order directing
its re-instatement, with immediate effect, as the service provider under the tender
until its expiry. The applicant contends, chiefly, that its offer wa s not for the
contract price of R1 148 811.64 which the College accepted and awarded the
tender on but it was this amount multiplied by 3years. In other words, the applicant
states that it ought to have been awarded the 3years’ tender for the price of
R3 446 434.92. It further sought a mandamus for the provision by the College, of a
service level agreement that was drawn in line with these calculations.
[7] The applicant also sought compensation in the sum of R95 734.30
representing the value of the hygiene services it rendered for a period of 3 months
from 01 September 2022. It further sought compensation in the sum of
R351 025.73 on the ground that the College was in possession and use of its
cleaning equipment from the time of its installation until the d ate on which this
Court makes its order. On this score, the applicant states that the College did not
invite it to collect its equipment after the cancellation.
[8] The application is opposed only by the first, third and fourth respondents
(the respondents ) who state that the College cancelled the contract following its
repudiation by the applicant and on the basis that there was lack of consensus
between the parties regarding the contract price – a material terms of the contract.
The respondents also filed a counter application for self -review of the decision to
award the tender to the applicant. The self -review is contingent on a finding,
should one be made by this Court, that there is a valid agreement between the
should one be made by this Court, that there is a valid agreement between the
applicant and the first respondent for the total price of R3 446 434.92.
[9] In seeking to review the decision to award the tender, the respondents state
that the tender was not lawfully awarded to the applicant on the grounds of
defective tender documents that the applicant submitted, and its failure to meet the
threshold of cost effectiveness and the applicable point system under the
Preferential Procurement Framework Act 5 of 2000 (the Procurement Act).
[10] The applicant, in turn, opposes the counter application on the grounds that it
stands in contradistinction to the respondents’ defence that there was never a valid
contract hence it was cancelled, and on the ground that, in any event, ‘no case has
been made by the respondents for that self-review under PAJA.’
The common cause facts
[11] The applicant was among several tenderers that made offers to the College
in response to its invitation for tenders for the provision of hygiene services. In its
tender documents, the applicant quoted the already mentioned amount of
R1 148 811.64. This amount is stated in the ‘form of offer’ annexed to the tender
documents that formed part of the record of the decision under review which the
respondents submitted. The other tenderers whose specific identities are not
material for the present purposes, had t endered the amounts of R563 047.79;
R639 078.00; R1 187 545.20; R1 538 303.80; R1 692 543.37; R2 342 727.28;
R2 618 847.63; R2 712 798.68; R3 625 200.00, and R6 448 252.86, respectively.
After the applicable bid evaluation and adjudication process, with so me of the
tenderers disqualified on various grounds, the applicant was awarded the contract
for the tender price of R1 148 811.64 as the tenderer that scored the highest points
on the relevant selection criteria.
[12] The College communicated its acceptanc e of the applicant’s offer in the
appointment letter written by the third respondent and dated 23 August 2022,
which appointment the applicant accepted on the same day. The material portion of
the appointment letter reads as follows:
“It is with great pl easure to inform you that your offer for the provision of hygiene services at
King Hintsa TVET College has been accepted.
This acceptance is in accordance to bid amount R1 148 811.64 that you submitted for this service
for a period of three years.
An official purchase order will be issued to you in due course, and you will be expected to enter
into a Service Level Agreement (SLA) to be signed between yourself and the College outlining
detailed scope, terms and conditions of the appointment.
Once again, congratulations on your appointment and hope that the College will have a fruitful
relationship with Eco Chemical Solutions. . .”
[13] The service level agreement mentioned in the appointment letter stipulated,
among other things, the following terms:
‘3. APPOINTMENT AND ACCEPTANCE
3.1 The College hereby appoints the Service Provider to render the Services detailed
in the Scope of Work in this Agreement.
3.2 The Service Provider hereby confirms its acceptance of the appointment and
undertakes to execute it s obligations at the cost and on the forms regarding the
time for delivery and/or execution as set out in:
3.2.1 the bid Documentation
3.2.2 this Agreement
3.3.3 any other terms and conditions as may be agreed upon in writing by the
parties.
3.3 In the event of any conflict between the provisions of this Agreement and the bid
documentation, the provisions of this Agreement shall prevail.’
[14] In terms of the service level agreement, the duration of the contract was, 3
years (36 months) from 01 Septembe r 2022 to 31 August 2025. The bid amount of
R1 148 811.64 for which the award was made to the applicant is stated in the said
agreement as R1 148 811.64 for the period of 3 years. The service level agreement
further provides that the applicant would bill t he College monthly on the stated
tender amount.
[15] While no purchase order had been issued to it, the applicant commenced the
rendering of the services from 01 September 2022, and it had not signed the said
agreement, and it installed the hygiene and cleaning equipment.
[16] During September 2022, the app licant submitted its first invoice for an
amount of R95 734.30 which it calculated on the amount of R3 446 434.92. A
disagreement emerged at that time regarding the contract price that was offered and
accepted between it and the College. The Applicant alle ged that its quotation of
R1 148 811.64, was a computation of its prices for a year, made up of the monthly
prices for the monthly billing. The College, on the other hand, alleged that it
understood the applicant’s quotation as being the computation and st atement of the
contract price for the entire period of 36 months.
[17] Following this discord, and while the service level agreement had not been
signed, a meeting was held between the applicant and the officials of the College
on 29 September 2022, in wh ich the matter was ventilated. In that meeting, it
emerged that there was no meeting of the minds between the applicant and the
College regarding the amount of the quotation and what the College envisaged
when it appointed the applicant. This meeting, toge ther with a trail of
communication that was exchanged between the parties in an attempt to resolve the
impasse yielded no positive results.
[18] The applicant persisted in its unwillingness to sign the service level
agreement, and the College subsequently cancelled its appointment as the provider
of hygiene services by the aforementioned letter dated 30 November 2022.
The issues to be determined
[19] Appropriately paraphrased from the parties’ respective practice notes, the
issues to be determined in the main application as outlined by the applicant are–
(a) Whether the contractual dispute between it and the first respondent is a
purely private law matter or whether it is subject to administrative justice.
(b) Whether the decision of the respondents to withdraw the awarded tender is
liable to be reviewed under PAJA on the ground of procedural fairness. In
this regard, the court must determine whether t he College met the threshold
of transparency and fairness in making the decision to cancel the contract in
circumstances where the applicant attempted to attain consensus between it
and the respondents by negotiating a fair outcome; and
(c) Whether the app licant had any vested or accrued rights in the award of the
tender.
[20] From the respondents’ perspective, this Court must determine whether the
relief that the applicant seeks is competent. The respondents sate that the decision
to cancel the contract is not susceptible to review under PAJA. In the event of a
finding being made that the decision concerned is reviewable, the respondents seek
a self-review of the applicant’s appointment as the service provider on the grounds
already mentioned.
Condonation
[21] Both the main application and the counter application have been filed out of
time. Condonation has been sought by the parties, respectively, of the late filing of
the applications. The respondents’ explanation is, in essence that since the College
had cancelled the contract in terms of the law of contract, it did not anticipate that
its decision would be taken on review under PAJA. The respondents do not oppose
the applicant’s application for condonation. I am indeed satisfied that a sufficient
and reasonable explanation has been proffered by the applicant for the late filing of
its application.
[22] The applicant, however, opposes the respondent’s application for
condonation. As a ground of its opposition, it states that the respondents made no
case for such condonation under section 9 of PAJA. The respondents contend that
owing to the importance of the case to the parties, and the fact that the applicant
has not pleaded any prejudice should the condonation be granted, the condonation
ought to be grante d. Subject to what I will state below regarding applicant’s PAJA
contention in so far as it relates to the respondent’s application for self -review, I
need only state, for the present, that a case has been made by the respondents for
the granting of the condonation sought.
The applicants’ case
[23] In seeking the present review, the applicant relies on section 6 of PAJA and
alleges that the cancellation of its appointment was unlawful, in that, the College
failed to properly apply its mind to its bid docume nts and pricing schedule for the
services to be rendered. Had they done so, they would have understood that the
amount it quoted was a yearly amount as opposed to the total contract price for the
36 months (3 years) of the tender. The cancellation, so the contention continues,
was also procedurally unfair in that the College failed to afford it or its indigent
employees who relied on it for work a fair hearing and an opportunity to make
representations before cancelling the appointment.
[24] The applicant goes on to state that the cancellation creates a serious risk of
loss of employment for the indigent and unemployed community members,
whereas employment is integral to a person’s meaningful participation in the
country’s economy. The cancellation was mal a fides and therefore, a referral back
to the College would be a waste of time, hence, it seeks a substitution order as
envisaged in section 8(1)(c)(ii) (aa) of PAJA is the appropriate relief. The applicant
further states that since the College had utilize d its hygiene and cleaning
equipment and still has them in its possession even after the cancellation of the
contract, it is liable to compensate it in the sums already stated.
[25] Dealing with its dissatisfaction with the cancellation of the contract, t he
applicant states as follows in the relevant portion of its founding affidavit:2
“The cancellation and withdrawal of the cleaning contract and appointment is unlawful. King
Hintsa together with the other Respondents do not have the right in terms of the law of contract
to unilateral (sic) take a decision to terminate the agreement prematurely before it ends within
the three-year period, it is based on this reason that the Applicant, in terms of the law of contract,
repudiated the contract and holds the d ecision of the Respondent unlawful in terms of the
Promotion of Just Administrative A34ct (sic). . . The Applicant exercised it contractual right to
repudiate the Respondent’s cancellation, and directed that the Respondent comply with the
agreement. . .”
[26] In holding the College to the contract, the applicant states that it reasonably
construed its acceptance of the offer of R1 148 811.64 as an acceptance of this
amount per annum at the total price of R3 446 434.92 for the period of 3 years. In
essence, the applicant relies on quasi -mutual assent. The applicant further states
that there was an oral agreement between it and the College that it would
commence with the rendering of services and sign the service level agreement in
the course of time. Its subs equent refusal to sign that agreement was as a result of
the dissensus regarding the tender price.
[27] Regarding its failure to sign the service level agreement, the applicant avers
that it refused to do so in the light of the absence of consensus betwee n the parties
pertaining to the contract price that was offered and accepted between them. When
pertaining to the contract price that was offered and accepted between them. When
the College cancelled the agreement, it ‘repudiated’ the cancellation, hence it seeks
to hold it to the agreement by means of this application.
2 See paragraph 25 and 26 of the applicant’s founding affidavit.
The case for the respondents
[28] The respondents raised two points in limine. The first one was that the
review relief sought is ill-conceived, in that, the cancellation was an exercise of the
first respondent’s contractual right after the applicant repudiated the contr act. This,
so the respondents contend, was so, notwithstanding that when it invited tenders up
to their evaluation and adjudication, it was exercising public power. According to
the respondents, when the applicant was appointed as the service provider, thi s
marked the beginning of a purely contractual relationship, hence, PAJA finds no
application in the first respondent’s decisions to cancel the appointment and to re -
advertise the invitation for tenders.
[29] As regards the second point in limine, the respondents raise two issues.
Firstly, they contend that an order directing the College to provide a service level
agreement which accords with the contract price contended for by the applicant
would amount to this Court concluding a contract for the parties against the firmly
entrenched principle of the law of the privity of contracts.
[30] Secondly, the respondents contend that being directed to recalculate the
contract price according to the specifications post ulated by the applicant would
result in the appointment of a service provider with the most expensive tender
among other tenderers, and this would be in breach of the Procurement Act and
section 217 of the Constitution which enjoin organs of state to contr act for
procurement of goods and services in accordance with a system which is fair,
equitable, transparent, competitive and cost effective.
[31] On the merits of the application, the respondents assert that the applicant’s
appointment was lawfully cance lled after it failed to sign the service level
agreement, thereby repudiating it; and on the basis that there was no consensus
between the parties regarding the contract price that the applicant offered.
[32] According to the respondents, the applicant di d not offer R3 446 434.92 as
the contract price. For a valid offer of this amount, so the respondents say, the
applicant ought to have transferred to the form of offer that accompanied its tender
documents, the total bid for the 3 -year period. The responde nts go on to state that
this requirement was explained in a compulsory briefing session that was held on
23 February 2022 in which the applicant was duly represented by its agent. In this
regard, they annexed the minutes of the briefing meeting in which a summary is
given, inter alia, of the explanation that was provided to the tenderers on how the
final contract price is to be computed and stated on the form of offer.
[33] I interpose to mention that the record of the decision under review indicates
that on the form of offer annexed to the applicant’s tender document, which was
not part of the documents that the applicant relied on in seeking the review, the
total contract price is stated as R1 148 811.64. There is indeed no indication ex
facie the form of offer, that the offered price was for one year or it was a yearly
amount that would be payable to the applicant. The result, so the respondents’
contentions continue, is that the amount of R1 148 811.64 as stated in the
applicant’s offer from was accepted as the applicant’s bid amount for the entire
period of 3 years. For these reasons, the respondents contend that the dissensus was
a material one which rendered the contract void from inception.
The applicant’ s reply
[34] In reply, the applicant asserts that the respondents are at fault for
misconstruing its quotation since, in it, it computed the contract price in clear terms
as being an annual amount of R1 148 811.64. They failed to properly apply their
minds to its tender documents. It denies t hat when it refused to sign the service
level agreement, it acted in breach of the agreement between it and the first
respondent.
[35] As regards the alleged lack of consensus between the parties, the applicant
states that the dispute before this Court ‘h as nothing to do with the requisites of a
valid contract but with the unlawfulness of the first respondent’s decision to cancel
its appointment.’ The applicant further states that the respondents failed to follow a
proper dispute resolution process and unl awfully cancelled the contract while the
dispute regarding the contract price was pending.
The counter application
[36] In the counter application for self -review, the respondents state, in essence,
that the tender was not lawfully awarded to the applicant in that its tender
documents were defective for failure to state the total contract price in accordance
with the procurement specifications of the College. They further state that there
were other tenderers who submitted acceptable bids but whose offers w ere lower
than the amount of R3 446 434.92 which the applicant contends for as being the
contract price he offered.
[37] It is the respondents’ contention further, that, a tender for the amount
contended for by the applicant would be in breach of sections 2(1)(b)(ii) and
2(1)(f) of the Procurement Act. In terms of section 2(1)(f), the contract must be
awarded to the tenderer who scores the highest points, unless objective criteria in
addition to those contemplated in paragraphs (d) and (e) justify the awar d to
another tenderer. Section 2(1)(b)(ii) provides for the point system applicable on
the prescribed evaluation criteria.
[38] The respondents go on to state that a tender amount of R3 446 434.92 would
offend the requirement of a fair, transparent, comp etitive and cost-effective tender
process as such amount was not publicly made known at the opening of the bids,
but the amount of R1 148 811.64 that the applicant offered was.
The applicant’ s opposition to the counter application
[39] Shorn of all verbiage, the applicant’s opposition to the counter application is
premised on two grounds. The first ground is that the application for self -review is
diametrically opposed to the respondents’ assertion that it lawfully terminated the
contract based on lack o f consensus, hence, according to the applicant, there is no
decision to review. The applicant re -iterates that the principles of contract have no
bearing in this matter.
[40] In reply to this opposition, the respondents re -iterate that the self -review is
conditional upon a finding being made in favour of the applicant in the main
application. It further contends that since it seeks a self-review, it is not available to
it to employ the provisions of PAJA.
The parties’ submissions
[41] Mr Vobi, who, together with Mr Nase, appeared for the applicant, submitted
that since the applicant did not sign the service level agreement, no contract came
into existence between it and the College. What was in place between the applicant
and the College, so the submission continued, was a promise to contract which did
not constitute an agreement. For this reason, so Mr Vobi submitted, the decision to
terminate the contract fell within the ambit of PAJA and constituted administrative
action in that the College was performing a public function in the course of the
procurement process.
[42] In making these submissions, Mr Vobi relied on several authorities which I
do not deem necessary to enumerate. Those authorities deal with the reviewability
of the exercise of public power in the context of the procurement process and other
types of administration action unrelated to the matter at hand. This is unsurprising,
since, on the applicant's version, the decisions under consideration were purely
administrative. Whether this characte rization is correct is the question I am called
upon to answer.
[43] It was further submitted on behalf of the applicant that the College was
bound by the principles of administrative justice to give the applicant a hearing
before it cancelled the award. Mr Vobi went on to submit that the College cancelled
the award without following proper process. It failed to have regard to the fact that
the applicant still intended to have the matter resolved and thus prematurely
terminated the award. As regards the co unter application for self -review, Mr Vobi
submitted that it stands to be dismissed, as no case was made for it under PAJA and
because it stands in contradistinction to the respondents’ defences in the main
application.
[44] It is necessary at this point, to swiftly dispose of Mr Vobi’s submission
regarding the applicability of PAJA in a self-review. This submission is founded on
the wrong premise that an entity exercising public power that seeks to invalidate its
own decision must do so in terms of PAJA. The correct legal position is that such a
review cannot be dealt with under PAJA but under the legality review.3
[45] On behalf of the respondents, Ms Mathe-Ndlazi submitted the applicant
mischaracterized the matter as falling within the purview of public law. She
submitted that when the applicant’s offer was accepted by the College, a contract
came into being and their relationship was governed by the law of contract. The
cancellation of the contract, so the submission went, was the result of lack of
consensus between the parties regarding a material term of the contract and the
applicant’s repudiation. Consensus is indeed the foundational requirement for a
valid agreement, there must be a meeting of the minds between the parties, in that,
they are on par regarding all the material aspects of the contract and are aware of
the other party’s intention. The corollary is that in the absence of such an
3 State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40; 2018 (2) SA
23 (CC) para 41; MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014
(5) BCLR 547 (CC); 2014 (3) SA 481 (CC); see also, Minister of International Relations and Co -operation and
Others v Simeka Group (Pty) Ltd and Others (610/2021) [2023] ZASCA 98 (14 June 2023), para 28.
agreement between the parties, one cannot speak of a valid contract giving rise to
rights and obligations.4
[46] Ms Mathe-Ndlazi went on to submit that, notwithstanding the lack of
consensus, the applicant was given a hearing at the meeting that was held for the
purpose of resolving the matter.
The relevant legislative framework and legal principles
[47] The con stitutional imperative of just administrative action enjoins those
exercising public power to observe the rules of administrative justice in making
decisions that may affect the rights of others. PAJA defines ‘administrative action’5
as any decision taken, or any failure to take a decision by –
(a) an organ of state, when —
(i) exercising a power in terms of the Constitution or a provincial constitution; or
(ii) exercising a public power or performing a public function in terms of any
legislation; or
(b) 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 effect external legal
effect.
[48] The same Act further defines ‘decision’6 as any decision of an administrative
nature made, proposed to be made, or required to be made, as the case may be,
under an empowering provision, including a decision relating to –
(a) making, suspending, revoking or refusing to make an order, award or determination;
(b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent
or permission;
(c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;
4 Van Huyssteen et al Contract General Principles, 6th edition (Juta) 2020, p 30.
5 Section 1 of PAJA.
6 Id.
(d) imposing a condition or restriction;
(e) making a declaration, demand or requirement;
(f) retaining, or refusing to deliver up, an article; or
(g) doing or refusing to do any other act or thing of an administrative nature, and a reference
to a failure to take a decision must be construed accordingly;
[49] And, ‘empowering provision’ 7 is defined to mean a law, a rule of common
law, customary law, or an agreement, instrument or other document in terms of
which an administrative action was purportedly taken.
[50] It is indeed a constitutional injunction that organs state in the national,
provincial or local sphere of government, or any other institution identified in
national legislation, in contracting for goods or services, to do so in accordance
with a system which is fair, equitable, transparent, competitive and cost -effective.8
To this end, the organs of state and such other institutions are endowed with
powers to implement the relevant and appropriate procurement policies. The
Procurement Act is the legislation that giv es meaning to this constitutional
injunction. The relevant Regulations promulgated under this Act are the legislative
instruments that further guide the procurement process in the government sphere
and in relation to relevant public institutions.
[51] It i s trite that the tender process constitutes administrative action which
entitles a party contracting with an organ of state or institutions exercising public
power, to a lawful and procedurally fair process and an outcome, where its rights
were affected or threatened.9
[52] The answer to the legal debate regarding whether, once a tender has been
awarded, the parties’ relationship becomes a purely contractual one, or remains
7 Id.
8 Section 217 of the Constitution.
9 Logbro Properties CC v Bedderson NO and Others (372/2001) [2002] ZASCA 135; [2003] 1 All SA 424 (SCA);
2003 (2) SA 460 (SCA) (18 October 2002) (Logbro), at para 5, and all authorities referred to therein.
governed by the principles of administrative justice, was explained by Cameron JA
in Logbro,10 with reference to an earlier decision of that Court, in Cape Metro11, as
follows:
‘[T]he Court’s judgment makes it plain that the answer depends on all the circumstances. The
critical passage in the reasoning of Streicher JA is this:
‘Those terms [ie entitling the public authority to cancel the contract] were not prescribed by statute and
could not be dictated by the [public authority] by virtue of its position as a public authority. They were
agreed to by the first respondent, a very substantial commercial undertaking. The [public authority],
when it concluded the contract, was there fore not acting from a position of superiority or authority by
virtue of its being a public authority and, in respect of the cancellation, did not, by virtue of its being a
public authority, find itself in a stronger position than the position would have b een had it been a private
institution. When it purported to cancel the contract, it was not performing a public duty or implementing
legislation; it was purporting to exercise a contractual right founded on the consensus of the parties in
respect of a com mercial contract. In all these circumstances it cannot be said that the [public authority]
was exercising a public power.’12
The learned Judge went further and said:
‘The case is thus not authority for the general proposition that a public authority empow ered by
statute to contract may exercise its contractual rights without regard to public duties of fairness.
On the contrary: the case establishes the proposition that a public authority’s invocation of a
power of cancellation in a contract concluded on e qual terms with a major commercial
undertaking, without any element of superiority or authority deriving from its public position,
does not amount to an exercise of public power.’13
[53] The Court, in the subsequent case of Steenkamp,14 said:
10 Logbro, footnote 6 supra.
[53] The Court, in the subsequent case of Steenkamp,14 said:
10 Logbro, footnote 6 supra.
11 Cape Metropolitan Council v Metro Inspection Services Western Cape CC and Others (10/99) [2001] ZASCA 56;
2001 (3) SA 1013 (SCA); 2001 (10) BCLR 1026 (A) (30 March 2001), para 18.
12 Logbro, para 9.
13 Id, para 10, and re -affirmed by the Constitutional Court in Steenkamp NO v Provincial Tender Board of the
Eastern Cape (CCT71/05) [2006] ZACC 16; 2007 (3) SA 121 (CC); 2007 (3) BCLR 300 (CC) (28 September
2006), para 50.
14 Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) (Steenkamp).
‘Everything though is not administrative law. Seen in isolation, the invitation to tender is no
doubt an offer made by a state organ ‘not acting from a position of superiority or authority by
virtue of its being a public authority’, and the submission of a tender in r esponse to the invitation
is likewise the acceptance of an offer to enter into an option contract by a private concern who
does so on an equal footing with the public authority. The evaluation of the tender is however a
process governed by administrative l aw. Once the tender is awarded the relationship of the
parties is that of ordinary contracting parties although in particular circumstances the
requirements of administrative justice may have an impact on the contractual relationship.’15
[54] And, two year s later, in Thabiso Chemicals,16 a case in which the contract
was cancelled on the ground of misrepresentation relating to the tender documents
submitted, after the tender was awarded, the Court, with reference to Cape Metro17
and Steenkamp NO,18 said the following:
‘I do not believe that the principles of administrative law have any role to play in the outcome of
the dispute. After the tender had been awarded, the relationship between the parties in this case
was governed by the principles of contract law. The fact that the Tender Board relied on authority
derived from a statutory provision (ie s 4(1) (eA) of the State Tender Board Act) to cancel the
contract on behalf of the Government, does not detract from this principle. Nor does the fact that
the groun ds of cancellation on which the Tender Board relied were, inter alia, reflected in a
regulation. All that happened, in my view, is that the provisions of the Regulations. . . became
part of the contract through incorporation by reference.’19 (footnotes omitted)
With these legal principles in mind, I proceed to determine the dispute before me.
Discussion
[55] There is an overlay between respondents’ first point in limine and their
Discussion
[55] There is an overlay between respondents’ first point in limine and their
assertion that the contract was cancelled owing to absence of consensus betwee n
the College and the applicant regarding a material term of the contract.
15 Ibid, at para 12.
16 Government of the Republic of Sout h Africa v Thabiso Chemicals (Pty) Ltd (148/2007) [2008] ZASCA 112; 2009
(1) SA 163 (SCA) ; [2009] 1 All SA 349 (SCA) (25 September 2008) (Thabiso Chemicals).
17 Supra footnote 8.
18 Ibid, paras 11 and 12.
19 Thabiso Chemicals, para 18.
[56] In dealing with the first point in limine – that the cancellation of the contract
was not an administrative action, reference will inexorably be made to contractual
principles as they relate to the nature and creation of contracts. For germane to the
question whether the matter is a purely contractual relationship between the parties
or whether their contractual relationship must yield to the principle of just
administrative action, are the features of the function that the College performed
when it cancelled the contract and the particular facts of the case.
[57] In the present case, regard must be had, first, to the fact that once the
applicant’s offer was accepted by the C ollege, a contract came into being. This
accords with the principle as enunciated in CGEE Alsthom Equipment Et
Enterprises Electriques, South African Division v GKN Sankey (Pty) Ltd 20 and
Jicama 17 (Pty) Ltd v West Coast District Municipality .21 Mr Vobi’s submission,
which suggests otherwise, cannot be sustained. I need not deal with the distinction
between such a contract and the pactum de contrahendo (a promise to enter into an
agreement in the future). In any event, on the applicant’s own version, a contract
came into being between it and the College, but it was unlawfully terminated.
[58] The question whether the College’s decision to cancel the contract is an
administrative action susceptible to review, must be understood against the
background of the case that the applicant has pleaded. On its own showing, the
applicant exercised its contractual right to repudiate the contract when it became
evident that there was lack of consensus between it and the College. I must state
that despite its own as sertion in this regard as I quoted it elsewhere in this
judgment, the applicant has, in its founding papers, simultaneously, and perhaps ill-
advisedly, asserted its right to just administrative action in terms of PAJA.
20 1987 (1) SA 81 (A) at 92A-E.
21 2006 (1) SA 116 (C) at 120F-I.
[59] It is also worth noting that in its reply, the applicant sought to distance itself
from the assertion it made in its founding papers. I need only re -state that an
applicant stands and falls by its founding papers, 22 and it is not permissible of the
applicant to make out one case in its founding papers and another in its replying
affidavit.23
[60] With all of this said, regard must here be had to the fact that the tender
process which, as mentioned, constituted admini strative action had become
completed. After all, the applicant has not approached this Court complaining that
the tender was cancelled for any reasons relating to its evaluation and adjudication.
That process came and went, and the applicant emerged as the successful bidder.
[61] The applicant also acknowledges that it repudiated the contract as a matter
of its contractual right in the light of the fact that the parties were not ad idem
regarding the contract price which was a material term of the contract that was
purportedly offered and accepted between the parties. I take note of the fact that
the applicant accepted its appointment on the same date of receipt of the
appointment letter. That the parties would have to enter into a service level
agreement which detailed the scope, terms and conditions of the appointment, was
foreshadowed in the appointment letter.
[62] Repudiation is a form of anticipatory breach of contract which alludes to a
forecasted malperformance. When it takes place, the other party is entitled to
enforce the remedies for breach of contract.24 The College had the right to exercise
any of the remedies for this kind of breach. The position of power that the College
was in during the stage of stipulating the terms of the tender, its eval uation and
adjudication, and its decision to ward the tender was no longer at play.
22 Director of Hospital Services v Mistry 1979 (1) SA 626 (A) at 635H-636B.
22 Director of Hospital Services v Mistry 1979 (1) SA 626 (A) at 635H-636B.
23 SA Railways Recreation Club and Another v Gordonia Liquor Licensing Board 1953 (3) SA 256 (C) at 260AD.
24 Van Huyssteen et al, supra, pp408-409.
[63] In cancelling the contract following the applicant’s admitted repudiation, the
College was not exercising any statutory powers, their relationship was purely a
contractual one. From this, it ought to follow that the parties were on an equal
footing. As a result, the College did not have an obligation to observe the rules of
administrative justice before cancelling the contract.
[64] Therefore, it can hardly lie in th e mouth of the applicant, to state that the
College was obliged, as a matter of just administrative process, to afford it a
hearing before cancelling the contract. The first respondent’s first point in limine,
that the cancellation of the contract was not an administrative action must,
therefore, be upheld. In the light of these findings, I shall not have to determine the
counter application.
[65] Even if I am wrong in making the above findings, there are other grounds on
which the application would have to fail. From the common cause facts, there can
be no denying the fact that there was no consensus between the College and the
applicant regarding a material term of the contract. This much is acknowledged by
the applicant despite its attempt to later disav ow its own assertion of lack of
consensus. Not even the applicant’s reliance on the quasi -mutual assent would be
of assistance in its quest to hold the College to the contract. In order to successfully
rely of quasi -mutual assent, the applicant must establ ish that the conduct that
induced its belief is attributable to the College.25
[66] In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty)
(Ltd) v Pappadogianis,26 it was held:
‘[T]he decisive question in a case like the present is this: did the party whose actual intention did
not conform to the common intention expressed, lead the other party, as a reasonable man, to
believe that his declared intention represented his actual intention?. . .To answer this question, a
three-fold enquiry i s usually necessary, namely, first, was there a misrepresentation as to one
25 George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A).
26 1992 (3) SA 234 (A), at 239I -240A.
party's intention; secondly, who made that representation, and thirdly, was the other party misled
thereby?. . .The last question postulates two possibilities: was he actually misl ed and would a
reasonable man have been misled?’ (footnotes omitted)
[67] The minutes of aforementioned briefing session, together with the relevant
form of offer in which the correct computation and/or statement of the tender price
ought to have been rec orded in keeping with the instructions communicated in the
briefing session, have been produced by the respondent. The applicant has not, it
its reply, dealt with this significant aspect with any degree of particularity. As a
rule, the respondents’ asserti ons in this regard must be accepted as being
uncontroverted and correct.
[68] The respondents make reference to the fact that contrary to the instructions
and specifications that were issued in the briefing session as aforementioned, the
applicant’s form of offer did not have any specific mention of the fact that the
amount of R1 148 811.64 was for one year, in circumstances where the invitation
to tender made no provision for a yearly price, but a contract price for 3 years. Nor
does the applicant’s form of offer indicate a multiplication of that amount by 3
years so as to give the total for the duration of the contract.
[69] Moreover, in the appointment letter, the College stated in clear terms that its
acceptance of the applicant’s offer was in respect of R1 148 811.64 for the period
of the contract which was 36 months. The appointment was accepted by the
applicant without any objection regarding the stated terms of its appointment. The
Colleges’ assertion regarding the contract price and the duration of the contract is
repeated in the service level agreement that the College provided the applicant to
sign. I am satisfied that the College did not misrepresent its true intention to the
applicant. The applicant’s reliance on the quasi -mutual assent is, ther efore,
applicant. The applicant’s reliance on the quasi -mutual assent is, ther efore,
unavailing to it. For all the foregoing reasons, the applicant’s review application
must fail.
[70] I must deal next with the applicant’s claim for compensation on the basis set
out at the commencement of this judgement. The respondents have indeed
conceded the payment of an amount of R95 734.30 representing the services that
the applicant rendered for three months from 01 September 2022. However, they
deny liability for the sum of R351 025.73 which the applicant states, is the value of
the remainder of the of the period for which the respondents were in possession
and use of is cleaning equipment. It is the applicant’s contention, in support of this
latter portion of compensation, that the respondents never invited it to collect the
cleaning equipment, instead, it continued using it.
[71] In denying liability for R351 025.73, the respondents allege that the
applicant knew that it was entitled to collect its equipment and the College did not
have to request it to do so. The respondents further deny th at the College used the
applicant’s equipment and allege that it appoints companies that render cleaning
services on quotation and rotation basis. Even though the College did not need to
tender any restitution in the cancellation letter, in law, it is the cancelling party’s
duty to restore what it received under the contract.27 The respondents’ view that the
applicant knew that it was entitled to collect its equipment subsequent to the
cancellation is ill-conceived.
[72] Ordinarily, it is just, that there be restitution following the cancellation of the
contract, unless there are exceptional grounds for there not to be restitution. 28 In
supporting its claim for compensation for the cleaning services and equipment
provide for three months from 01 September 2022, the applicant has annexed to its
founding papers, ‘Annexure A’ which tabulates quantities of and cost of various
items of hygiene equipment it installed at the College. From Annexure A, the total
amount of the tabulated equipment is readily discernibl e. As mentioned, the
amount of the tabulated equipment is readily discernibl e. As mentioned, the
27 Northwest Provincial Government and Another v Tswaing Consulting CC and Others , 2007 (4) SA 452 (SCA) at
458 (para 17); Van Schalkwyk v Griesel 1948 (1) SA 460 (A) at 472.
28 Northwest Provincial Government and Another v Tswaing Consulting CC and Others, supra, para 17.
respondents conceded the College’s liability for this portion of the applicant’s
claim to compensation.
[73] According to the applicant, the College’s liability is in respect of the alleged
possession and use of its cleaning equipment after the cancellation of the contract,
until the date of this Court’s order, for which it claims R351 025.73. It may very
well be that the latter portion of the compensation that the applicant claims, is
founded on unjustified enrichment. As held in Kudu Granite Operations (Pty) Ltd v
Caterna Ltd,29 for the general remedy for enrichment, in assessing whether there
has been enrichment, the defendant (respondent) must have been enriched; the
plaintiff (applicant) must have been impoverished; there must be a causal link
between the enrichment and the impoverishment; and the enrichment must have
been unjustified for lack of legal justification.
[74] It is, however, not clear from the papers, how the applicant arrived at the
amount of R351 025.73. This portion of the claim seems inchoate to the extent that
the applicant has not pleaded the requirements that would sustain a claim under the
general remedy for enrichment. It bears emphasizing that in motion proceedings,
the function of affidavits is not o nly to identify the issues between the parties as
would do pleadings in action proceedings, but also to place evidence before court,
and the deponent to an affidavit must clearly and concisely set out the facts relied
upon in the affidavit.30 The need for precision in pleading in the affidavits the facts
on which a party relies for the relief it seeks can never be over emphasized.
29 Kudu Granite Operations (Pty) Ltd v Caterna Ltd (100/02) [2003] ZASCA 64; [2003] 3 All SA 1 (SCA); 2003 (5)
SA 193 (SCA) (30 May 2003), para 17; PRASA Corporate Real Estate Solutions v Community Property Company
Ltd and Another (384/2023) [2024] ZASCA 35 (28 March 2024), para 27.
Ltd and Another (384/2023) [2024] ZASCA 35 (28 March 2024), para 27.
30 Swissborough Diamond Mines (Pty) Ltd and Others v Government of the Republic of South Africa and Others
1999 (2) SA 279 (T) at 323F – 324D.
[75] In any event, unlike the first amount claimed by the applicant, the
respondents dispute liability for this latter portio n of the compensation sought.
They deny using the applicant’s equipment and the fact that it was at the instance
of the College that the applicant never collected the equipment from the site. The
respondents are placing at issue material facts concerning t his portion of the
compensation. As is trite, application proceedings are determined on undisputed
facts.
[76] Be that as it may, I was not requested to refer this portion of the relief that
the applicant seeks to oral evidence. In the light of the finding that I made that the
relief sought by the applicant regarding the amount of R351 025.73 is, in any
event, inch oate, I hold the view that the applicant, if so minded, may institute
appropriate proceedings to pursue its claim for this portion of the relief that it
sought.
[77] With that said, since the respondents appear to be able and willing to restore
what they received from the applicant under the contract, viz, the cleaning
equipment that was installed and used by the College for three months from 01
September 2022, I see no reason why such an order should not be made. I note that
no request was made in the notion of motion for interest on the amounts claimed as
compensation. As Centlivres CJ once said, ‘interest is today the “lifeblood of finance”
and under modern conditions a debtor who is tardy in the due payment of a monetary obligation
will almost invariably deprive his creditor of the productive use of the money and thereby cause
him loss. It is for this loss that the award of mora interest seeks to compensate the creditor.’31
[78] Moreover, section 2 of the Prescribed Rate of Interest Act 55 of 1975 makes
provision for payment of interest on ‘a judgment debt’ which it defines, inter alia,
as ‘ a sum of money due in terms of a judgment or an order of a court of law’.
31 Linton v Corser 1952 (3) SA 685 (AD) at 695.
There is no reason why, in this case, mora interest should not be awarded on the
amount that the respondents have conceded as the restitution due to the applicant.
Costs
[79] Even though submissions were made in the applicant’s heads of argument
that if the application fails, the applicant ought to benefit from the protection of the
Biowatch32 principle regarding costs, this submission was not in any way pressed
during oral arguments, nor was it indicated that the applicant stands by those
written submissions made regarding Biowatch. On the contrary, Mr Vobi submitted
that if the application succeeds, the applicant must be awarded costs as sought in
the notice of motion. Since the review application falls to be dismissed, the
converse ought to prevail – costs must accordingly follow the result.
[80] In the result, I make the following order:
1. The late filing of the application for review (the main application) and the
counter application, is hereby condoned.
2. The main application is dismissed, with costs.
3. The first respondent shall pay to the applicant R95 734.30 for its use, for the
period of 3 months from 01 September 2022, of the applicant’s hygiene
equipment, within 30 days from the date of this order.
4. The first respondent shall pay interest on the above stated amount of
R95 734.30 at the applicable legal rate a tempore morae to date of payment.
___________________
L. RUSI
JUDGE OF THE HIGH COURT
32 Biowatch Trust v Registrar Genetic Resources and Others (CCT 80/08) [2009] ZACC 14; 2009 (6) SA 232 (CC);
2009 (10) BCLR 1014 (CC) (3 June 2009), para 23.
Appearances:
For the applicant : Adv. Vobi
Adv. Nase
Instructed by : Xakwe Attorneys Inc.
c/o Z. Mfiki Attorneys, Mthatha
For the respondents : Adv. Mathe-Ndlazi
Instructed by : T. L. Luzipho Attorneys, Mthatha
Date heard : 27 March 2025
Date delivered : 29 September 2025