IN THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE DIVISION, EAST LONDON
Case No: EL 614/2025
In the matter between:
EASTERN CAPE DEVELOPMENT CORPORATION Applicant
and
MANDLA MPIKASHE First Respondent
MBABANE & SOKUTU INCORPORATED
(Registration Number: 2013/097644/21) Second Respondent
SIMPHIWE MKHULULU MBABANE Third Respondent
MTUMELELO MKOSANA Fourth Respondent
BAYETHE MASWAZI Fifth Respondent
___________________________________________________________________
JUDGMENT
___________________________________________________________________
APPELS AJ:
Introduction
[1] The Eastern Cape Development Corporation (“the ECDC”) is a public entity
as contemp lated by section 3(1)(b) read with schedule 3 of the Public Finance
Management Act 1 of 1999 (“the PFMA”) and is an organ of state as defined in
section 239 the Constitution of the Republic of South Africa, 1996 (“the
Constitution”).
[2] This application is an opposed self -review application in which the ECDC
seeks orders setting aside certain decisions taken and agreements concluded on its
behalf by the first respondent, its former employee, who was employed at all relevant
times as its Executive Manager: Legal Compliance and Governance.
[3] More particularly, the ECDC seeks an order ( inter alia) reviewing and setting
aside:
a) A Debt Collection Service Level Agreement (“the First Debt Collection SLA”),
concluded by the first respondent on behal f of the ECDC, in terms of which
the second respondent was appointed as a debt collector to recover money
that was due and payable to the ECDC from an entity known as ARWA
Retirement Fund (“ARWA”).
b) A Debt Collection Service Level Agreement (“the Second De bt Collection
SLA”), concluded by the first respondent on behalf of the ECDC, in terms of
which the second respondent was appointed as the debt collector to recover
money that was due and payable to the ECDC from an entity known as
Express Builders CC (“Express Builders”).
c) An agreement concluded by the first respondent on behalf of ECDC, in terms
of which the second respondent was appointed to review certain lease
agreements of the ECDC.
[4] The ECDC contends that the impugned agreements should be reviewed and
set aside on the basis of the principle of legality in that they are in breach of the
constitutional and statutory framework governing procurement by an organ of state.
It is alleged that the aforesaid decisions and agreements were concluded in terms of
processes that were non -compliant with the provisions of section 217 of the
Constitution and ought to be declared unlawful and set aside in terms of Section
172(1)(a) and (b) of the Constitution.
[5] The application is opposed by all the respondents mainly on the following
bases:
a) Firstly, the following points in limine are raised:
i. Mootness;
ii. Misjoinder; and
iii. The “once and for all rule” and/or lis pendens.
b) Secondly, it is alleged that there has been undue delay in the bringing of this
application and the court s hould accordingly not entertain the merits of the
review.
c) Thirdly, it is contended that the first respondent had the necessary authority
to conclude the impugned agreements on behalf of the ECDC by virtue of a
Delegation of Authority issued by the former CEO of the ECDC.
d) Finally, it is contended that the first respondent had the authority to vary and
amend existing agreements, and the Debt Collection SLAs were variations of
an existing agreement between the parties.
[6] Notably, on the merits of the review, it was not contended by any of the
respondents that the Debt Collection SLAs were concluded following a lawful
procurement process. Instead, the grounds upon which the respondents rely
premised on the first respondent’s purported authority in terms of the D elegation of
Authority and his authority to vary the terms and conditions of existing agreements.
[7] The ECDC filed its replying affidavit outside of the time periods provided for
in the Uniform Rules of Court and accordingly, it also brought a condonation
application in which it sought condonation for the late filing thereof. The condonation
application was initially opposed by the second to fifth respondents.
[8] During the hearing, while the ECDC’s counsel, Mr. Cole SC, was addressing
the court in argument i n respect of the condonation application, Mr Sishuba, on
behalf of the second to fifth respondents, stood up and informed the court that his
clients were no longer opposing the condonation application and only sought an
order for costs. Condonation for th e late filing of the ECDC’s replying to affidavit will
therefore be granted as part of the order that the court issues in this matter.
[9] The only remaining issue in respect of the condonation application which the
court was required to determine is who should be ordered to pay the cost of the
application for condonation.
The Facts
[10] The first respondent is an admitted attorney. As indicated above, he was
previously employed by the ECDC. He resigned from his employment with the ECDC
effective from 1 February 2024, while he was on paid suspension and during the
course of pending disciplinary proceedings related to his involvement in the
conclusion of the impugned agreements.
[11] The second respondent is a law firm, duly registered as a personal liability
company as contemplated by Section 8 of the Companies Act 71 of 2008 (“the
Companies Act”). The third, fourth and fifth respondents are legal prac titioners who
at all relevant times were practicing as attorneys and directors of the second
respondent. They were cited in their capacities as current and former directors of the
second respondent and as interested parties only. No substantive relief was sought
against them. Costs were only sought against them in the event that they opposed
the application.
[12] On 1 October 2012, the ECDC’s then CEO, Mr. S Masi, issued a delegation
of authority, entitled “ Delegation of Authority to Sign Legal Agreements by th e
Manager: Legal and Compliance Unit ” (“the 2012 Delegation”), which authorised the
Manager: Legal and Compliance Unit to conclude and sign all legal agreements with
legal service providers falling within the Legal and Compliance Unit, to vet or review
and recommend all legal agreements concluded by the various ECDC Business
Units and to vary, and approve deviations from the terms and conditions emanating
from the aforementioned legal agreements. It is on this delegation of authority that
from the aforementioned legal agreements. It is on this delegation of authority that
the respondents re ly for the contention that the Debt Collection SLAs were lawfully
concluded.
[13] The ECDC approved supply chain management policies (“SCM policies”)
during March 2015 (“the 2015 SCM Policy”) and April 2018 (“the 2018 SCM policy”)
respectively. The aim of the SCM policies was to provide an appropriate
procurement system that is fair equitable, transparent competitive and cost effective.
[14] During or about July 2015, the erstwhile CEO of the ECDC approved and
signed a delegation of authority (“the 2015 Delegation” ) which authorised its CEO
and other functionaries to sign SLAs with service providers whose services have
been procured in terms of the ECDC's approved procurement policy, subject to such
SLA’s being recommended for signature by the Manager: Legal Services.
[15] The first respondent, as Manager of Legal Services, was permitted in terms
of the 2015 Delegation to make recommendations in respect of the conclusion of
agreements to certain executive managers and functionaries mentioned in the
delegation. However, the authority of those functionaries was limited in the sense
that they could only exercise such authority if the relevant services had been
procured in terms of the ECDC's approved procurement policy.
The First Debt Collection SLA
[16] On or about 22 August 2014 the first respondent, purportedly acting on
behalf of the ECDC, concluded the first Debt Collection SLA with the second
respondent in respect of the recovery of money due and payable to the ECDC by
ARWA.
[17] The ECDC’s claim for re covery against ARWA emanated from a written
agreement between an investment company, Interneuron (Pty) Ltd (“Interneuron”),
which was mandated to manage certain of the ECDC’s investments. An investigation
report revealed that Interneuron, in order to conce al losses caused by it and in
breach of its investment mandate, unlawfully transferred to ARWA the sum of R8
918 397.61 from the ECDC’s portfolio of assets.
[18] The material terms and conditions of the first Debt Collection SLA included
the following:
a) The ECD C required the services of “ Debt Collectors” to assist with the
recovery of money due and payable to it.
b) The ECDC appointed the second respondent to recover from ARWA all
money which included but was not limited to capital and interest due and
payable by the latter to the ECDC.
c) The second respondent would be entitled to payment of commission on all
money successfully recovered from ARWA calculated at 30% of the amount
recovered.
[19] It is common cause that the first Debt Collection SLA was concluded without
following any competitive bidding process or any other lawful procurement process
which complied with the prescribed statutory framework.
[20] Moreover, when the First Debt Collection SLA was concluded, the ECDC
had an established and lawfully procured panel of Debt Collectors that were
mandated to perform debt collection services of the kind stipulated therein. The
second respondent was not on the ECDC’s panel of Debt Collectors.
[21] Debt collection services in terms of lawfully procured debt collection SLAs,
are provided by service providers who are on the panel of Debt Collectors, on a no
collection no fee basis. Where success is achieved, they are entitled to a
commission of 30% of the amount recovered. The commission earned is substantial,
to offset the risk in providing services on a no collection no fee basis.
[22] It is also common cause that there was at the time an existing Legal
Services SLA between the ECDC and the second respondent, in the form of a 2013
Legal Services SLA, which provided for legal services t o be provided and
remunerated at an hourly rate, without a substantial commission percentage fee in
the event of success as provided for in the first Debt Collection SLA.
[23] In fact, prior to the ECDC concluding the first Debt Collection SLA, it had
already instituted action against Interneuron. The second respondent acted on behalf
of the ECDC in the action against Interneuron in terms of the existing 2013 Legal
of the ECDC in the action against Interneuron in terms of the existing 2013 Legal
Services SLA and at the agreed hourly fee stipulated therein. At some point during
the course of the legal proceedings against Interneuron, the third respondent
advised the ECDC that ARWA should be joined as a defendant in the action against
Interneuron.
[24] It is important to note that doing the necessary to join ARWA as a defendant
in the action agains t Interneuron was a service the second respondent was obliged
to perform upon instruction from the ECDC in terms of the 2013 Legal Services SLA
and at the agreed hourly fee stipulated therein. However, instead of instructing the
second respondent to do wh at was necessary to join ARWA as a defendant in the
action against Interneuron, the first respondent decided to conclude the first Debt
Collection SLA in terms of which the second respondent was appointed to recover
the money owed by ARWA to the ECDC at a commission of 30% of the total sum
recovered.
[25] Upon the institution of legal action, ARWA tendered the first of a series of
settlement proposals, which eventually, during or about January 2019, culminated in
a settlement agreement between and the ECDC and A RWA, in terms of which
ARWA undertook to pay to the ECDC an amount of R6 000 000.00 in full and final
settlement of its claim.
[26] The amount of R6 000 000.00 was recovered and received by the second
respondent, purportedly in terms of the first Debt Collection SLA. From the amount of
R6 000 000.00, it deducted a 30% collection fee in the amount of R2 070 000.00
(including VAT) and paid over an amount of R3 030 000.00 to the ECDC.
[27] Had the second respondent been instructed to recover the ARWA debt in
respect of the existing 2013 Legal Services SLA, the ECDC would have recovered
the sum of R6 000 000.00, being the full settlement amount, less only the second
respondent’s usual attorney and client fee at the agreed hourly rate.
The Legal Services SLA
[28] On 2 March 2016, pursuant to a lawful and competitive bidding process as
contemplated by the 2015 SCM policy, the ECDC Bid Adjudication Committee
contemplated by the 2015 SCM policy, the ECDC Bid Adjudication Committee
approved sixteen service providers for appointment to the ECDC’s Legal Services
Panel (“the LSP”) for a period of three y ears from March 2016 to June 2019. The
second respondent was one of the successful service providers appointed to the
LSP.
[29] Pursuant to the Bid Adjudication Committee’s decision, the second
respondent and the ECDC, concluded a written service level agreement (“the Legal
Services SLA”). In addition, three service providers were appointed to a separate
panel for debt collection s ervices on a no collection no fee basis. Importantly, the
second respondent was not appointed to the debt collection panel.
The Second Debt Collection SLA
[30] On 5 May 2017, the ECDC’s Head: Development Finance and Business
Support, Ms Rozani, instructed the first respondent to take steps to recover from
Express Builders the amount of R2 898 857.49, which was due and payable to the
ECDC in terms of a performance guarantee loan agreement.
[31] The relevant background to the aforementioned instruction is that Express
Builders was awarded a contract with a gross contract value of R28 988 574.94 by
OR Tambo District Municipality. In order to meet its obligations in terms of the
contract, Express Builders applied for and obtained a loan from the ECDC. As a
result, the EC DC disbursed in aggregate the amount of R22 480 407.81 into an
ABSA Bank account held by Express Builders, inclusive of a performance guarantee
loan in the amount of R2 898 857.49.
[32] Andile Seth Incorporated, was the debt collector from the ECDC’s approved
Debt Collection Panel who was initially appointed to recover the debit owing to the
ECDC in respect of the loan. The recovery process was handled internally by
Mr Meiring, formerly employed by the ECDC as its Manager: Debt Collections. A
substantial sum of the funds owing to the ECDC was repaid by Express Builders.
What was not repaid was the performance guarantee loan, which had been withheld
by ABSA Bank. Andile Seth Incorporated failed to recover the amount in respect of
the performance loan agreement, and that amount plus the interest that accrued on it
the performance loan agreement, and that amount plus the interest that accrued on it
was still outstanding as of 5 May 2017 when Ms Rozani issued the instruction to the
first respondent.
[33] On 11 April 2017, approximately one month prior to the date on which the
instruction was sent to the first respondent by Ms Rozani, the ECDC terminated the
mandate of Andile Seth Incorporated. It appears that what led to the termination of
the mandate was Mr Seth’s insistence that the ECDC should accept a settlement
offer which he had negotiated. The settlement offer was not acceptable to the ECDC.
Instead, the ECDC wanted Andile Seth Incorporated to institute legal action to
recover the full outstanding capital of the performance loan agreement, plus all
accumulated interest thereon.
[34] The first respondent, upon receiving the instruction from Ms Rozani, decided
that the second respondent should be appointed to recover the outstanding amount
plus interest, from Express Builders.
[35] Notwithstanding the fact that the second respondent was not on the
approved ECD C’s approved panel of Debt Collectors, who were appointed after a
lawful procurement process, the first respondent sent a letter of instruction to the
second respondent on 8 May 2017, which contained ( inter alia ), the following
paragraphs:
“4. Notwithstanding that your firm is in the ECDC panel of Attorneys, kindly be
advised that your firm will be paid its commission in accordance with the
attached debt collection agreement. Please note that the attached debt
collection agreement will only be applicable to the abovementioned matter.
5. This serves to confirm that your firm has undertaken to recover these monies
on a risk basis in that the ECDC will be able to settle your firm’s commission
in the event that it successfully recovers the capital amount and in terest
accrued thereof. The ECDC will not be liable for any legal fees or costs
incurred for the recovery of the aforementioned monies in the event of
unsuccessful recovery of partly recovery.
6. You must always liaise with the Executive Manager: Legal, Compliance &
Governance in regard to the conduct of this mater and should you need to
Governance in regard to the conduct of this mater and should you need to
procure the services of an Advocate, please consult the writer hereof before
preparing a brief … ”
[36] On 9 May 2017 pursuant to the letter of instruction, the first respondent,
purportedly acting on behalf of the ECDC, concluded the second Debt Collection
SLA with the second respondent. 1 The material and express terms of the second
Debt Collection SLA were the same as the terms and conditions of the first Debt
Collection SLA referred to above. In addition, both SLA’s contained the same terms
and conditions as the standard Debt collection SLAs which were concluded between
the ECDC and Debt Collectors who were appointed to the Debt Collectors Panel
pursuant to a competitive and lawful bidding processes as explained above.
[37] The second Debt Collection SLA was concluded with the second
respondent, notwithstanding the fact that:
a) Besides Andile Seth Incorporated, there were two other service providers
that were app ointed to the ECDC’s panel of Debt Collectors following the
conclusion of the procurement process;
b) The second respondent was not appointed to the ECDC’s panel of Debt
Collectors; and
c) The scope of services the second respondent was appointed to deliver wit h
respect to the recovery of the performance loan agreement fell within the
scope of work that it was supposed to perform in terms of the existing Legal
Services SLA it had concluded with the ECDC.
[38] In November 2017, approximately five months after the conc lusion of the
second Debt Collection SLA, the second respondent collected the amount of
R6 238 959.19 in respect of the Express Builders matter, from which it deducted
30% collection fee in the amount of R2 133 724.05 and paid over R4 105 235.14 to
the ECDC.
[39] It is common cause that like the first Debt Collection SLA, the second Debt
Collection SLA was also not concluded pursuant to a competitive bidding process.
1 According to the forensic investigation report by SVZ Consulting (Pty) Ltd, although the agreement
is dated May 2017, it was in fact sent by email to the second respondent for the first time in November
2017.
The Agreements to Review Lease Agreements
[40] It is common cause that the Legal Services SLA termin ated by effluxion of
time on 14 June 2019 after which the second respondent was no longer entitled to
receive any new instructions from the ECDC. On 31 May 2019, the ECDC’s former
CEO, Mr N Dlulane, addressed a letter to the second respondent recording tha t the
Legal Services SLA was due to expire on 14 June 2019 and that thereafter, no new
legal matters should be accepted by the second respondent nor handled on behalf of
the ECDC under the Legal Services SLA. Legal matters in respect of which
instructions were placed before the contract expiry date which were still pending
could be dealt with until finalisation.
[41] During or about November 2019, the ECDC’s erstwhile acting Head of
Properties, Ms van Dyk, requested the first respondent to review certain lease
agreements. At the time, the Legal Services SLA had already terminated.
Notwithstanding the termination of the Legal Services SLA, the first respondent
instructed the second respondent to review these lease agreements. Pursuant to this
instruction, the seco nd respondent allegedly reviewed the lease agreements and
issued invoices dated 13 December 2019 and 4 March 2020 respectively to the
ECDC. As a consequence, the ECDC paid to the second respondent a total amount
of R248 745.00 during or about December 2019 and March 2020 respectively.
The Detection of the Illegality
[42] During 2019, the irregularities in respect of the Debt Collection SLAs were
detected by Mr Norman Trimalley (“Mr Trimalley”), an official employed by the ECDC
as its Manager: Internal Audit. He reported the irregularities to the then CEO of the
ECDC, who summoned the first respondent to his office. The first respondent, relying
on the 2012 Delegation, managed to persuade the CEO that Mr. Trimalley was
wrong and that the Debt Collection SLAs were lawfully concluded.
[43] On 21 June 2022 a complaint was conveyed to the incumbent CEO by the
[43] On 21 June 2022 a complaint was conveyed to the incumbent CEO by the
ECDC's Fraud and Ethics Hotline. The purpose of the Hotline is to allow members of
the public to report unlawful conduct on the part of the ECDC and its employees. The
complaint concerned the circumstances surrounding the recovery of funds owed to
the ECDC by Express Builders and more particularly, whether or not the legal fees
incurred in recovery these funds were paid to the relevant service providers pursuant
to a valid procurement process.
[44] On 22 June 2022, the CEO instructed the CDC's internal audit unit (“Internal
Audit”) to investigate the complaint in order to assess whether there was possible
merit which warranted the initiation of an independent and external investigation. A
month later, on 22 July 2022, the CEO received a report compiled by Mr Trimalley.
The report revealed that inter alia , the second Debt Collection SLA was not
concluded pursuant to an approved procurement process as required by the ECDC's
SCM policy. As a result of the findings of the report, the first respondent was placed
on special leave on 11 August 2022, pending the outcome of an independent
forensic investigation.
[45] On 6 September 2022, the ECDC appointed SVZ Consulting (Pty) Ltd
(“SVZ”) to conduct an external forensic investigation into the complaint. The report of
SVZ was received by the ECDC on 17 October 2022 and contained detailed findings
following comprehensive forensic investigative work into both the first and second
Debt Collection SLAs as well as the instructions to review the lease agreements.
[46] The first respondent was placed on paid suspension during December 2022,
and in February 2023, the ECDC issued a notice to him to attend a disciplinary
hearing together with a charge sheet. The disciplinary h earing commenced and
proceeded sporadically throughout 2023, but was delayed because the first
respondent submitted medical certificates which suggested that he was unable to
attend the proceedings. On 31 December 2023, while the disciplinary proceedings
were still pending, the first respondent tendered his resignation and as a result the
ECDC terminated the disciplinary proceedings.
Analysis
Points in Limine
[47] It is necessary to deal with the points in limine raised by the respondents
before dealing with the undue delay and the merits of the review.
[48] The second to fifth respondents raised mootness as a point in limine. It is
contended that the impugned agreements have expired and both parties have
discharged their obligations in terms thereof.
[49] The matter is however far from moot. There is still a separate pending legal
action that has been instituted against the respondents by the ECDC, emanating
from the impugned agreements. Incidentally, the respondents have raised the failure
to review the impugned agreements in the pending legal action. The validity of the
impugned agreements is therefore still a live dispute between the parties which
requires determination.
[50] A point of misjoinder has also been raised. In thi s regard, it should be noted
that third to fifth respondents have been cited as former directors of the second
respondent, by virtue of being jointly and severally liable together with the second
respondent for any debts and liabilities of the second respo ndent in terms of section
19(3) of the Companies Act. They contend however that because the present
proceedings are not for the recovery of debts as contemplated in section 19(3) of the
Companies Act, they have been misjoined.
[51] It is trite that an interest ed party who has a direct and substantial legal
interest in the subject matter of the proceedings and whose rights might be
detrimentally affected by the order that the court might make, must be joined. No
court may make any findings adverse to a person’s interest unless that person is
joined in the proceedings.2
[52] Whilst it is correct that no relief is sought against the second to fifth
respondents in terms of section 19(3), granting the orders sought by the ECDC in
this review application would undoubtedly adversely affect their interests.
[53] They have therefore been correctly joined in these proceedings, and the
point of misjoinder cannot be sustained.
[54] Finally, the “ once and for all rule” , alternatively lis pendens was also raised
[54] Finally, the “ once and for all rule” , alternatively lis pendens was also raised
by the respondents. It is contended that there is already an action pending between
2 Matjhabeng Local Municipality v Eskom Holdings 2018 (1) SA 1 (CC) at para 92
the same parties in respect of the same subject matter. The respondents complain
that the relief sought against them in this application should have been sought in the
pending action instituted by the ECDC.
[55] The essence of the once and for all rule is that where damages result from a
single cause of action, a plaintiff must claim damages once and for all in respect of
all damages already sustained or expected in future. 3 The rule is not applicable i n
this matter because the ECDC is not seeking any damages in this review application.
[56] In this review application this court is required to rule on whether the
impugned agreements should be declared invalid and reviewed and set aside in
terms of Section 17 2(1)(a) and (b). In the civil action, the court would be required to
give a judgment on what amount, if any, is recoverable by the ECDC from the
respondents in respect of overreaching in the charging of legal fees. The cause of
action in this review applic ation and the cause of action in the civil action are
therefore different and distinct.
[57] The once and for all rule does not apply where separate proceedings are
instituted for separate causes of action, despite the fact that those causes of action
may relate to the same factual circumstances.4 Furthermore, a party wishing to raise
lis pendens must allege and prove (inter alia) that there is pending litigation between
the same parties based on the same cause of action in respect of the same subject
matter.5
[58] Since the causes of action in the civil action and in this review application
differ, the points in limine in respect of the once and for all rule and lis pendens
cannot be sustained.
The Delay in bringing the self-review application
[59] Before dealing with the merits, it is necessary to consider the lengthy delay
in bringing this application.
3 Mmabasotho Christina Olesitse NO v Minister of Police [2023] ZACC 35 at para 20
4 Mmabasotho Christina Olesitse NO v Minister of Police, supra at paras 58-63
4 Mmabasotho Christina Olesitse NO v Minister of Police, supra at paras 58-63
5 Nestle (SA) (Pty) Ltd v Mars Inc 2001 (4) SA 542 (SCA)
[60] The application was instituted in April 2024, ten years after the first Debt
Collection SLA was concluded, seven years after the second Debt Collection SLA
was concluded and five years after the instructions to review the lease agreements
were issued. The ECDC contend that the delay is not unreasonable as the
irregularity only became known in 2022 when it received the external investigation
report compiled by SVZ and since then it had been pursuing various other remedies.
[61] Following the decision of the Constitutional Court in the matter of State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd, 6 it is now
settled law that an organ of state seeking to review its own decision must do so
under the principle of legality. The Promotion of Administrative Justice Act 3 of 2000
(“PAJA”) does not apply when an organ of state applies for the review of its own
decision.7
[62] In Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd 8
(“Asla”) the Constitutional Court provided an exposition of the principles applicable to
delay in terms of PAJA, as well as in terms of legality reviews. In this regard it was
confirmed that, unlike a review application in terms of PAJA which must be brought
within 180 days of the applicant becoming aware of or ought reasonably to have
become aware of the administrative actions, there is no fixed period in whi ch an
applicant is supposed to bring a review application. 9 The time period of the delay is
therefore not calculated from the date on which the irregularity occurred, but rather
from the date on which the organ of state became aware or ought reasonably h ave
been aware of the irregularity.
[63] The distinction between the assessment of a delay in terms of PAJA and a
delay in a legality review was first dealt with by the Supreme Court of Appeal in
6 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd 2018 (2) SA 23 (CC);
2018 (2) BCLR 240 (CC)
2018 (2) BCLR 240 (CC)
7 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd 2019 (4) SA 331 (CC) (“Asla”) at
para 45. See also: Valor IT v Premier, North West Province and Others 2021 (1) SA 42 (SCA) at para
at para 27
8 Asla, supra at paras 46 - 59
9 Asla, supra at para 48
Opposition to Urban Tolling Alliance v South African National Roads Agency Ltd 10 in
which it was held that Section 7 of PAJA creates a presumption that a delay of
longer than 180 days is per se unreasonable.11
[64] The standard to be applied under both PAJA and legality for assessing delay
is reasonableness, with the diffe rence being that the fixed period of 180 days
prescribed by PAJA creates a presumption of unreasonableness which requires a
substantive application for condonation. No specific application for the condonation
of an unreasonable delay is required in legality reviews.12 However, an objection that
the delay in bringing a legality review application is unreasonable is ‘ pre-eminently a
point which the respondent or the Court should raise because the respondent and
the Court are best able to judge whether, having regard to the respective spheres of
influence of each, the lapse of time which has occurred merits the raising of an
objection’.13
[65] The court has a wide discretion when it comes to deciding whether the delay
should be overlooked, but the court’s discretio n is not unfettered. In Asla, it was
confirmed that the court should apply the two -step test applied in Khumalo and
Another v Member of the Executive Council for Education, KwaZulu -Natal14 to
consider whether the delay was unreasonable and whether it shou ld be
overlooked.15
Was the delay unreasonable?
[66] Answering the question as to whether the delay is an unreasonable delay, is
the first step of the Khumalo test.16 In legality reviews that question is a factual issue
10 Opposition to Urban Tolling Alliance v South African National Roads Agency Ltd [2013] 4 All SA
639 (SCA)
11 Asla, supra at para 49.
12 Khumalo and Another v Member of the Executive Council for Education, KwaZulu -Natal 2014 (5)
SA 579 (CC) at para 44. See also: Asla, supra at para 51
13 Scott and Others v Hanekom and Others 1980 (3) SA 1182 (C) at 1193B-C.
13 Scott and Others v Hanekom and Others 1980 (3) SA 1182 (C) at 1193B-C.
14 Khumalo and Another v Member of the Executive Council for Education, KwaZulu -Natal, supra
15 Asla, supra at para 51
16 Asla, supra at para 52
which requires making a value judgment. 17 The reasonableness of the delay is
considered, amongst other factors, based on the explanation for the delay.
[67] The explanation for the delay provided by the ECDC in this matter, pinpoints
17 October 2022 as the date that it became aware of the irregularit y. This is the date
on which it received the external investigation report from SVZ. It is not uncommon
for unlawful decisions of organs of state to go unchallenged for many years in
circumstances where there is active involvement by officials within the o rgan of
state.18 This matter is no different since first respondent, who was an employee of
the ECDC, was actively involved in the conclusion of the impugned contracts.
[68] Organs of state should have effective structures and mechanisms in place to
ensure proper oversight and to detect and prevent the abuse of taxpayer’s
monies.19 Therefore, an explanation that the organ of state was not aware of an
irregularity until a whistleblower came forward, would not ordinarily suffice.20
[69] However, this matter is different in that the ECDC did have mechanisms in
place to ensure compliance and to safeguard against irregularities. It has an internal
audit unit and has implemented supply chain management policies in accordance
with Regulation 16A of the Treasury R egulations. Furthermore, it has passed
delegations to ensure that its executive managers do not conclude contracts until
they are properly advised by a legally -qualified manager, responsible for its legal
services. In fact, in 2019, when payment was made t o the second respondent in
terms of the first Debt Collection SLA, the irregularity was detected by the ECDC’s
internal auditor Mr Trimalley.
[70] However, the very official who ought to have advised the ECDC against
concluding contracts which were unlawful, c oncluded contracts without following the
prescribed supply chain management processes. Furthermore, when the irregularity
prescribed supply chain management processes. Furthermore, when the irregularity
was detected by Internal Audit and reported to the former CEO, it was on advice of
17 Gqwetha v Transkei Development Corporation Ltd and Others [2005] ZASCA 51; 2006 (2) SA
603 (SCA) para 31 - 35
18 See for instance Valor IT v Premier, North West Province and Others, supra at para 34
19 Asla, supra at para 81
20 Asla, supra at para 78
the first respondent that the former CEO was persua ded that no illegality had
occurred.
[71] However from at least 17 October 2022, the ECDC could have been in no
doubt about the extent of the irregularities. Despite becoming aware of the full extent
of the irregularities, a further eighteen months elapsed be fore this application was
instituted in April 2024. That constitutes a lengthy period, which requires an
explanation covering the entirety of the delay.21 Where there is no explanation for the
delay, the delay will necessarily be unreasonable.22
[72] The CEO was furnished with a full investigation report on 17 October 2022,
setting out all the irregularities that occurred and he therefore had sufficient
information at his disposal to prosecute the review proceedings. He chose not to do
so. Instead, in the immediate aftermath of discovering the irregularities, the ECDC
focused its efforts on prosecuting disciplinary proceedings against the first
respondent. When it finally shifted its focus, it chose to pursue criminal investigations
and civil recovery proceedings. Furthermore, it was advised by senior counsel in
December 2023 that it ought to have instituted review proceedings, but it took a
further four months u ntil April 2024 before these proceedings were instituted. The
further delay of four months between December 2023 and April 2024 after receiving
this advice is not explained.
[73] In the circumstances, the explanation provided does not justify the delay in
bringing the review application.
Should the Delay be Overlooked?
[74] Once it is established that there has been an unreasonable delay, the court
has to enquire whether the unreasonable delay ought to be overlooked. 23 That
enquiry involves considering a range of factors, including “the length of the delay, the
reasons for it, the prejudice to the parties that it may cause, the fullness of the
21 Asla, supra at para 50
22 Alsa, supra at para 52
23 Asla, supra at para 53
explanation, the prospects of success on the merits ”.24 In Khumalo and Another v
Member of the Executive Council for Education , KwaZulu-Natal,25 it was held that a
court should be slow to allow procedural obstacles to prevent it from looking into the
unlawfulness of the exercise of public power.
[75] Although the explanation provided by the ECDC does not provide sufficient
basis for the court to overlook the delay, the explanation for the delay is only one of
many factors the court ought to consider when it comes to exercising its discretion.
[76] The merits of the review could in some limited circumstances be an
overriding factor. This i s especially so in circumstances where the unlawfulness is
clear and undisputed. 26 It is settled law that strong prospects on the merits, may
compensate for an explanation that is wanting, if the interests of justice, in the light of
its strong prospects of success, require condonation to be granted.27
[77] The assessment as to whether the delay should be overlooked is therefore
not complete until the court assesses the strength of the merits of the review.
[78] One of the reasons why a review application should be brought within a
reasonable time is “ because the passage of a considerable length of time may
weaken the ability of a court to assess an instance of unlawfulness on the facts .”28
In this regard it has been held that a long delay could cause documents and
evidence to get lost, undermining the ability of the review court to fully evaluate the
merits of the review.29
[79] In this matter, the delay has not impeded the court’s ability to scrutinise the
merits of the allegations of illegality. The facts of this matt er are clear and largely
24 Valor IT v Premier, North West Province and Others, supra at para 30
25 Khumalo and Another v Member of the Executive Council for Education, KwaZulu -Natal, supra at
para 45
26 Asla, supra at para 66
27 Valor IT v Premier, North West Province and Others, supra at 39
26 Asla, supra at para 66
27 Valor IT v Premier, North West Province and Others, supra at 39
28 Khumalo and Another v Member of the Executive Council for Education, KwaZulu-Natal, supra at
para 48
29 Khumalo and Another v Member of the Executive Council for Education, KwaZulu -Natal, supra at
para 48
undisputed. It is clear from analysis of the merits of the review set out below, that
there is no merit in the defences raised by the respondents. The unlawfulness of the
impugned agreements is manifest.
[80] The strength of the ECDC’s prospects of success on the merits of the review
in this matter is therefore sufficient to compensates for the unsatisfactory explanation
provided by the ECDC.
[81] Besides the explanation for the delay and the merits, there is also the
potential prejudice to a ffected parties to consider as well as the possible
consequences of setting aside an impugned decision. In Department of Transport v
Tasima (Pty)Ltd30, the court explained the impact of prejudice in assessing a delay in
bringing a review application as follows:
“But what is the prejudice suffered by Tasima in overlooking the delay? Condoning the
delay does not prevent them from enforcing the court orders that have been granted in their
favour. In addition, the contract extension itself has already expired. Setting aside the
extension at this point should not, therefore, impact negatively on Tasima going forward. It
is also a factor that this Court may rely on its section 172(1)(b) powers to ameliorate the
prejudice suffered. It bears repeating th at Tasima has, in addition, benefitted greatly from
the extension. In my view, the prejudice suffered is minimal, particularly in comparison to
the prejudice to be suffered by the Department and the Corporation if the counter-application
is not condoned. This is consonant with the dicta in Khumalo that, ‘consequences and
potential prejudice . . . ought not in general, favour the Court non -suiting an applicant in the
face of the delay’.”
[82] It is clear from the dictum above that prejudice to all the parties should be
considered, not only prejudice to the respondents. The court should weigh the
potential prejudice suffered by the respondents against the potential prejudice
suffered by the organ of state if the delay is not condoned.
suffered by the organ of state if the delay is not condoned.
[83] I have considered that t he respondents are innocent third parties that will be
prejudiced should the delay be overlooked. They are attorneys of this court, and they
ought to have been aware of what lawful procurement by an organ of state entails.
More importantly, they ought to have known that the ECDC as an organ of state may
30 Department of Transport v Tasima (Pty)Ltd 2017 (2) SA 622(CC) at para 170
not conclude agreements with a service provider for the provision of debt collection
services without such agreement having been approved by the Bid Adjudication
Committee following a competitive process. Th ey were aware that the second
respondent was not on the ECDC’s Debt Collection Panel that was appointed in
terms of a lawful bidding process. They ought to have known that the second
respondent was not entitled to the lucrative collection commission fees i n
circumstances where it was obliged to render legal services to the ECDC in terms of
the rates as agreed in accordance with the lawfully-procured Legal Services SLA.
[84] There is therefore no prejudice to the respondents in the circumstances of
this case whic h would prevent the court from overlooking the delay and enquiring
into the merits of the review.
[85] Accordingly, I find that it is in the interest of justice to overlook the delay.
The Merits of the Review
[86] Organs of state are bound by the provisions of section 217 of the
Constitution which enjoins the state to procure goods or services “in accordance with
a system which is fair, equitable, transparent, competitive and cost -effective.” In
Valor IT v Premier, North West Province and Others, 31 the court held that section
217 of the Constitution is meant to “ prevent patronage and corruption, on the one
hand, and to promote fairness and impartiality in the award of public procurement
contracts, on the other.”
[87] In addition, Regulation 16A3.1 of the Treasury Regulations 32 compels the
accounting authority of a public entity such as the ECDC to apply and develop an
effective and efficient supply chain management system for the acquisition of goods
and services. Procurement of goods and services that ar e compliant with the
aforementioned imperative takes place through quotations or a competitive bidding
system.
31 Valor IT v Premier, North West Province and Others, supra at para 40
system.
31 Valor IT v Premier, North West Province and Others, supra at para 40
32 Treasury Regulations of March 2005, issued in terms of Section 76 of the Public Finance
Management Act 1 of 1999
[88] Deviations from the prescribed procurement processes are permitted in
limited circumstances only. Regulation 16A6.4 of the Treasury Regulations provides
that if in a specific case it is impractical to invite competitive bids, the accounting
officer or accounting authority may procure the required goods or services by other
means, provided that the reasons for deviating from inviting competitive bids must be
recorded by the accounting officer or accounting authority.
[89] Both the first and second Debt collection SLAs were concluded without
following a competitive bidding process. In fact, at all relevant times, the ECDC had
already established a lawfull y-procured panel of Debt Collectors that was mandated
to provide the ECDC with debt collection services of the kind stipulated in the first
and second Debt Collection SLAs.
[90] In respect of the merits, the first respondent offers various reasons in his
answering affidavit as justification for why a competitive bidding process was not
followed prior to the conclusion of the Debt Collection SLAs with the respondent. He
asserts that ECDC received “benefit and value for money” following the conclusion of
the Debt Collection SLAs. He also contends that the conclusion of the Debt
Collection SLAs was required to off -set the element of risk associated with pursuing
the recovery of the claims. None of the aforesaid assertions explain why the second
respondent did not perform the services in terms of the existing legal services SLAs,
nor does it explain why, if it was necessary to conclude a Debt Collection SLA to
recover the outstanding amounts from ARWA and Express Builders, the ECDC did
not conclude a Debt Collection SLA with one of the service providers who was on the
panel of Debt Collectors that was appointed following a lawful tender process.
[91] In any event, none of the reasons now offered as justification by the first
respondent were recorded and approved in writin g as required by Regulation
respondent were recorded and approved in writin g as required by Regulation
16A.6.4 of the Treasury Regulations, nor is it contended that inviting competitive bids
was impractical in the circumstances of this case as contemplated in Regulation
16A.6.4.
[92] It is clear from the common cause facts that any s ervices which the second
respondent was required to render in order to recover the amount owed by Express
Builders and ARWA, fell within the scope of services in the Legal Services SLA and
at the fee and rates prescribed in that agreement. As a result of the conclusion of the
Debt Collection SLAs, the second respondent charged lucrative collection fees, as
opposed to the agreed legal fees it was entitled to in terms of the Legal Services
SLA.
[93] The contention of the respondents that the Debt Collection SLAs w ere
variations of the existing Legal Services SLA is also untenable. The respondents rely
on clause 4.2 of the Legal Services SLA together with the 2012 Delegation for the
contention that the first respondent was permitted to vary the terms of the existing
Legal Services SLA. Clause 4.2 reads as follows:
“Notwithstanding the fact that a description of the Services has been provided in Annexure A
hereto, ECDC shall be entitled to request additional services related to the deliverables
required and as may be required to ensure the successful completion of the Services set out
in annexure A on such further terms and conditions as may be agreed to between the
Parties in writing”.
[94] Firstly, the words “as may be required to ensure the successful completion of
the s ervices...” are instructive. It was simply not required to vary the terms of the
Legal Services SLA in order to recover the amounts owed by ARWA and Express
Builders to the ECDC. The second respondent ought to have simply provided the
legal services it was obliged to perform in terms of the Legal Services SLA and at the
agreed hourly rates stipulated therein.
[95] Secondly on the facts, both Debt Collection SLAs were clearly new
agreements which were concluded based on a decision taken by the first
respondent, without following the prescribed procurement processes. They were not
variations of an existing agreement.
[96] Accordingly, on the merits of the review application, the decisions to
conclude the Debt Collection SLAs are clearly inconsistent with the Constitutio n. The
Debt Collection SLAs are therefore unlawful and ought to be reviewed and set aside.
Debt Collection SLAs are therefore unlawful and ought to be reviewed and set aside.
[97] As with the Debt Collection SLAs, the agreements to review the lease
agreement were concluded without complying with the statutory and policy
framework applicable to the procurement of goods and services by the State. The
ECDC had an established LSP that was mandated to perform the legal services
which the first respondent instructed the second respondent to perform. The second
respondent was at all relevant times not on the ECDC’s LSP as the Legal Services
SLA had terminated by effluxion of time on 14 June 2019.
[98] The second respondent was therefore not lawfully entitled to receive the
instructions from the ECDC to render the services to the ECDC. As is the case with
the Debt Collection SLAs, the instructions to review the lease agreements breached
the principles of legality.
[99] The contention by the respondents that the first respondent was authorised
to conclude the impugned agreements with the second respondent on behalf of the
ECDC on the basis of the 2012 Delegation cannot be sustained. The delegations
cannot override the constitutional imperatives applicable to procurement of goods
and services by organs of state. The 2015 Delegation makes it clear that not even
the CEO has the authority to conclude agreements with service providers unless
there has been a lawful procurement process. It is inconceivable that any of the
respondents, who are legally qualified attorneys of this Court, could have laboure d
under the misapprehension that the first respondent possessed such authority.
[100] As justification for continuing to issue and accept instructions to review lease
agreements even after the Legal Services SLA expired, the respondents made bald
assertions that the instructions were received prior to the expiry thereof. No
documentary evidence was provided regarding the alleged prior instructions. Bald
assertions do not constitute evidence in motion proceedings.33
[101] In contrast, it is clear from the documentary ev idence provided by the ECDC
that the instructions to review the lease agreements emanated from a written request
sent by Ms van Dyk to the first respondent to review specified lease agreements in
November 2019 after the Legal Services SLA had already termi nated. These
November 2019 after the Legal Services SLA had already termi nated. These
instructions related to new lease agreements in respect of which the respondents
had not previously receive any instructions. A copy of the written request of Ms van
Dyk was attached to the ECDC’s papers. It clearly shows that the instruction to
33 Huelse-Reutte v Godde 2001(4)SA 1336 (SCA) at para 14
review the lease agreements was a new instruction, issued in November 2019 after
the Legal Services SLA had already terminated.
[102] What makes the conduct of the respondents in respect of the lease
agreement instructions particularly egregious, is that the ECDC sent a letter to the
second respondent prior to the expiry of the Legal Services SLA, drawing its
attention to the fact that the Legal Services SLA would expire on 14 June 2019 and
that they should not accept any further instructions issued to them af ter that
particular date.
Conclusion
[103] It is in the interest of justice to overlook the unreasonable delay in bringing
this application. The unlawfulness of the impugned agreements is clear.
[104] The court is therefore enjoined by Section 172 (1)(a) and (b) of the
Constitution to declare the impugned agreements unlawful and set it aside.
Costs
Costs of the Review Application
[105] In the Notice of Motion, the ECDC only requested costs against those
respondents who opposed the application. All the respondents opposed the
application. Their opposition was unsuccessful. There is no reason to deviate from
the general rule and costs o ught to follow the result. Since costs were only sought in
the event of opposition, the respondents should pay the applicant’s costs occasioned
by their opposition of the application.
Costs in the Condonation Application
[106] In normal circumstances, condonat ion is an indulgence and the party
seeking condonation should pay all the costs occasioned by the application,
including the costs of opposition thereto, if the opposition was reasonable.34
[107] However, in this matter, opposition to the condonation applicatio n was not
reasonable and was abandoned at the very last minute. In this regard, I consider that
the ECDC’s legal representatives sought an extension from the respondents prior to
the late filing of the replying affidavit. The request for an extension was r easonable
given the fact that the ECDC had to respond to two lengthy answering affidavits filed
by the respondents in this matter. In addition, there was no real merit or good
reason for the objection to the late filing of the replying affidavit.
[108] In the circumstances, the ECDC should not be ordered to pay the costs of
the opposition to the condonation application, and each party should pay their own
costs.
Order
[109] Accordingly, it is hereby ordered that:
[1] Condonation is granted for the late filing of the ap plicant’s replying affidavit
and each party in the condonation application should pay its own costs.
[2] The decision on or about 22 August 2014, by the first respondent,
purportedly acting on behalf of the applicant to conclude a Debt Collection Service
Level Agreement ("the first Debt Collection SLA") in terms of which the second
respondent was appointed as a debt collector to recover money from an entity
known as ARWA Retirement Fund, is hereby reviewed and set aside.
[3] The first Debt Collection SLA, marked "AW1" to the founding affidavit, is
hereby reviewed and set aside.
34 Myers v Abramson 1951 (3) SA 438 (C) at p451
[4] The decision on or about 8 and 9 May 2017, by the first respondent
purportedly acting on behalf of the applicant, to conclude a Debt Collection Service
Level Agreement ("the second Debt Col lection SLA") in which the second
respondent was appointed to recover money from an entity known as Express
Builders CC, is hereby reviewed and set aside.
[5] The second Debt Collection SLA, marked “AW2” to the founding affidavit, is
hereby reviewed and set aside.
[6] The decision on or about 28 November 2019 taken by the first respondent to
instruct the second respondent to review certain lease agreements of the applicant
(“the lease agreements instructions”) is hereby reviewed and set aside.
[7] The agreement conclud ed pursuant to the lease agreement instructions is
hereby reviewed and set aside.
[8] The first to fifth respondents, jointly and severally, the one paying the others
to be absolved, are to pay the costs incurred by reason of their opposition to the
application, such costs to include the costs of two Counsel, on Scale C.
________________________
G APPELS
ACTING JUDGE OF THE HIGH COURT
Heard: 24 July 2025
Delivered: 11 November 2025
APPEARANCES:
For the Applicant: Mr S Cole SC and Mr Voultsos
Instructed by: Wilma Langson and Associates Inc
Unit 3 Alexander Square
44 Second Avenue
Newton Park
GQEBERHA
For the First Respondent: Mr M Mayekiso
Instructed by: Ayoba Koswana Attorneys
1st Floor Global House Building
No 3 Pearce Street
Berea
EAST LONDON
For the Second to Fifth
Respondents : Mr M Gwala SC, Mr L Ngumle and
Mr Sishuba
Instructed by: Mr Mbabane Maswazi Inc
12 Douglas Road
Vincent
EAST LONDON