IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL DIVISION , PIETERMARITZBURG
CASE NUMBER: 3966/2020P
In the matter between:
SIZANANI MAZULU TRANSPORT (PTY) LTD
DUZI BUS SERVICES (PTY) LTD
IMPENDHLE SERVICES (PTY) LTD
TANSNAT COACH LINES (PTY) LTD
ISMAIL BHAYLA N.O.
AYESHA GORI SHAYLA N.O.
IRSHAAD PEER N.O.
MTUNZINI BUS SERVICES (PTY) LTD
RIPPLE EFFECT 40 CC
METRO BUS SERVICES (PTY) LTD
COMBINED TRANSPORT SERVICES (PTY) LTD
KZT COUNTRY CRUISER (PTY) LTD
KZT BUS SERVICES (PTY) LTD
MAPHUMULO MAIL (PTY) LTD
SOUTH COAST BUS SER.VICE (PTY) LTD
And
FIRST APPLICANT
SECOND APPLICANT
THIRD APPLICANT
FOURTH APPLICANT
FIFTH APPLICANT
SIX APPLICANT
SEVENTH APPLICANT
EIGHTH APPLICANT
NINTH APPLICANT
TENTH APPLICANT
ELEVENTH APPLICANT
TWELFTH APPLICANT
THIRTEENTH APPLICANT
FOURTEENTH APPLICANT
FIFTEENTH APPLICANT
THE MEMBER FOR THE EXECUTIVE COUNSIL
FOR TRANSPORT OF KWAZULU-NATAL
THE NATIONAL MINISTER FOR THE
DEPARTMENT OF TRANSPORT FOR THE
REPUBLIC OF SOUTH AFRICA
THE AUDITOR-GENERAL OF SOUTH AFRICA
THE MEMBER FOR THE EXECUTIVE
COUNCIL FOR THE DEPARTMENT OF FINANCE
OF KWAZULU-NATAL
THE ETHEKWINI METROPOLITAN MUNICIPALITY
THE NATIONAL MINISTER OF FINANCE AND
EXECUTIVE HEAD OF THE DEPARTMENT:
NATIONAL TREASURY FOR THE REPUBLIC OF
SOUTH AFRICA
JUDGMENT
PC BEZUIDENHOUT J:
2
FIRST RESPONDENT
SECOND RESPONDENT
THIRD RESPONDENT
FOURTH RESPONDENT
FIFTH RESPODNENT
SIXTH RESPONDENT
[1] This matter has a very long history which appears from the chronology in the
practice note of Applicants . During the period 1997 to 2001 the KwaZu lu-Natal
Department of Transport initiated a tender process for public transport services
concluding contracts with Applicants which are referred to as the old order contracts.
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During the period of 2005 to 2007 the older contracts expired due to effluxion of time
and were extended on a month to month basis. During the period of 2016 to 2017
nine contracts were concluded with certain of Applicants. During June 2017
Respondents and Applicants concluded addendums to the agreements which are
annexures "01 to 015A " extending the contracts for a interim period of one year. If a
tendered contract was extended into prior to the expiry of the interim period it shall
terminate.
[2] As these contracts were not renegotiated they were extended on a number of
occasions during the period 2017 to 2020 but then the Department of Transport
KwaZulu-Natal refused to extend it any further. In 2019 the Auditor General found the
extensions of the old order contracts to be irregular and contrary to the provisions of
the Public Management Finance Act 1 of 1999 (PFMA) and the Treasury instruction
note 3 of 2016/2/17. The Auditor General also found that the already negotiated
contracts to be irregular and contrary to the provisions of section 38(1 )(a)(iii) of the
PFMA.
[3] On 26 June 2020 this application commenced when an urgent application was
brought against the MEC for Transport KwaZulu Natal (Second Respondent) wherein
an order was sought that Respondents forthwith issue Applicants with written
extensions of each of Applicants 2017 contracts annexures "01 to 015A " already
referred to. Thereafter the matter came before this court on various occasions and
various orders were granted extending the contracts for periods of time. An application
was also granted to join certain Respondents. Various meetings were held between
the parties but no solution could be found despite the addition of the other
Respondents. Only First and Fourth Respondent oppose this application.
[4] There was also various amendments to the notice of motion of Applicants the
last which appear at page 1491 of the indexed papers. The relief sought therein is a
declarator that:
"3.
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3.1 Sections 41 and 46 of the National Land Transport Act S of 2009
permits provincial departments of transport to conclude
negotiated contracts with bus operators without going to tender.
3.2 The agreements marked annexures "01 to 014 and 01 SA" to the
Applicants founding affidavit and supplementary affidavits and the
extensions thereof are not rendered unlawful by the provisions of
the Public Finance Management Act 1 of 1999 (PFMA) and in
particular section 38(1 )(a)(iii) thereof.
3.3 That payments made under such contracts to Applicants by First
Respondent do not amount to irregular expenditure as defined in
section 1 of the PMFA.
4. An order directing the First Respondent to extend the interim contract
periods, in respect of clause 3.1 of each of the agreements concluded between
Applicants and First Respondent marked annexure "01 to 014 and 015A "
annexed to the Applicants founding and supplementary affidavit prior to the
expiration thereof until
4.1 A negotiated contract has been concluded with each of First to
Ninth Applicants and Fourteenth Applicant.
4.2 The implementation of the IPTN by the contracting authority is
finalised in respect of each of Tenth to Thirteenth and Fifteenth
and Sixteenth Applicants.
5. Directing First Respondent to extend the interim contract period in
respect of each of the agreements marked annexure "01 to 014 and
01 SA" to Applicants founding and supplementary affidavits for a period
of not less than a year on each occasion which extension will terminate
upon:
5.1 The conclusion of a new negotiated contract with the operator in
respect of each of F irst to N inth Appl icant s and Fourteenth
Applicant and;
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5.2 The implementation of the IPTN by the contracting authority in
respect of each of the Tenth to Thirteenth and Fifteenth and
Sixteenth Respondents.
6. An order directing First Respondent and any other Respondent
opposing , to pay the costs of this application with such costs to include
the costs of two counsel where so employed jointly and severally, the
one paying the others to be absolved."
[5] This is the notice of motion of Applicants which falls to be determined herein.
[6] As set out above the application is opposed by First Respondent and Fourth
Respondent. First Respondent brought a counter application as appears from page
116-3.
"3. Declaring that the addendum for the provision of public transport
services concluded between the Department of Transport for the
Province of KwaZulu-Natal and the following applicants:
Sizanani Mazulu Transport (Pty) Ltd, Duzi bus Services (Pty) Ltd,
lmpendle bus Services (Pty) Ltd Transnet Coach Lines (Pty) Ltd, Dumbe
Bus Services and Nondweni Bus Service trust, Mtunzini Bus Service (Pty
Ltd, Ripple Effect 40 CC, Metrow Bus Service (Pty) Ltd, Combined
Transport Services (Pty) Ltd, KZN Country Cruiser (Pty) Ltd, KZT Bus
(Pty) Ltd, KZN Country Cruser (Pty) Ltd, KZT Bus Services (Pty) Ltd,
Maphumulo Mail (Pty) Ltd, South Cost Bus Services (Pty) Ltd and Marrin
pine Transport (Pty) Ltd annexure "01 to 014 and 01 SA" to the founding
papers are declared to be inconsistent with the Constitution and are
invalid.
4. Decla ring that the declaration of invalidity in paragraph 3 is suspended
for a period of one year. Alternatively pending the decision of the
Department of Transport for the Province of KwaZulu-Natal to award a
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new tender (bid) after completion of the tender (bid) process ordered in
paragraph 5 under.
5. Directing the Department of Transport for the Province of KwaZulu-Natal
to put arrangements in place for the bus services to be put out to tender
and initiate a new tender (bid) process for the provisions of public
transport services within the province of KwaZulu-Natal within a period
of thirty days from the granting of this order.
6. Pending the decision of the Department of Transport for the province of
KwaZulu-Natal to award a new tender (bid) as is envisaged in paragraph
5 above and to ensure that the services can continue without interruption
as envisaged in section 42(1) of the National Land Transport Act 2009
the Applicants are authorised to provide public transport services on the
routes which they are currently operating within the province of KwaZulu
Natal for a period of one year from the date of granting of this order.
7. In the event that the tender (bid) is not awarded during the period of
suspension of the declaration of invalidity as envisaged in paragraph 3
read with paragraph 4 above the Respondents are authorised to
approach this honourable court for authorisation of a further extension
of the addendums envisaged in paragraph 3 above on the same papers
supplemented if necessary regarding the provision of public transport
services on the affected routes.
8. Directing that the order granted herein must be served on the Minister of
Transport , the Auditor General , KwaZulu-Natal Provincial Treasury and
eThekwini Municipality withing 5 days of the granting thereof .
9. The Respondent is ordered to pay the costs of this application only in
the event that none of the Applicants oppose the counter application ."
[7] It is sub mitte d by Applicants that the matter p rincipal ly turns on whether the
agreements are lawful and binding and whether they fall to be struck down for want of
compliance with the procurement legislation in the form of section 217 of the
compliance with the procurement legislation in the form of section 217 of the
Constitution section 38(1 )(a)(iii) of the PFMA and various treasury legislations and
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notes. The fundamental legal question must be seen in the context of legislation which
has been enacted over time specifically to regulate the transport sector in South Africa.
[8] It is submitted by First Respondent that the extensions of the older contracts is
a contravention of section 217 of the Constitution. The negotiated contracts concluded
in terms of section 41 of the National Land Transport Act (NLTA) are also in
contravention of the prescribed procurement legislative framework . The provisions of
the PFMA must take precedence over the provisions of the NLTA. It was submitted
that only Fifth Respondent in the implementation of the IPTN may negotiate in terms
of section 41 . That the illegality cannot be condoned by granted the declaratory orders
sought by Applicants.
[9] It is submitted by Fourth Respondent that the agreements in respect of which
the application was brought have lapsed and terminated . The court cannot grant a
declarator and directions which are incorrect in law and illegal. Further that the issue
is that section 217 of the Constitution requires a procurement process to be
undertaken for Government contracts for goods and services. That the auditor
General has concluded that the expenditure is irregular and that there is no reference
to a procurement process. The agreements concluded with First Respondent and any
extensions contemplated would be without any tender process. It is therefore
submitted on behalf of Fourth Respondent that the applications must be dismissed as
such orders cannot be granted.
[1 0] The issues that therefore have to be determined is whether the agreements
annexure "01 to 014 and O15A" are valid and do not contravene section 41 and 46 of
the NLTA or the Constitution or whether the agreements ought to be struck down as
invalid for want of compliance with the procurement legislation and particular section
217(1) of the Constitution and section 38(1 )(iii) of the PMFA and various transport
regulations.
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[11] Applicants contend that the provisions of section 41 and 46 of the NLTA
provides for a deviation from the usual procurement of services through a tender
process and that the negotiated contract model in terms of the NLTA does not offend
the provisions of section 217(1) of the Constitution , section 38(1 )(iii) of the PMFA and
the various treasury regulations and notes.
[12) Fourth Respondent submits that section 217 of the Constitution does not allow
the procurement process that was undertaken .prior to contracting with Applicants and
that the relief can therefore not be granted. Also that there has been non joinder of
National Treasury and that no order can be granted in the absence of the National
Treasury.
[13] Various contracts for transportation were granted to various of Applicants in
respect of various routes on 11 January 2011.
[14] Annexure "D1" is in respect of lmpendle Bus Services (Pty) Ltd, Third Applicant.
In the addendum it was recorded that the contract which was entered into on 1 October
2000 had terminated by effluxion of time. Services were thereafter rendered, and that
there were negotiations. It then sets out that from the date of signature of the
addendum the contract for services were extended for a period of one year save that
if the operator and KZNBOT enter into a new negotiated contract with the transport
services falling under the tender contract prior to the operation of the interim period
then the interim period shall terminate on such earlier date. This was signed on 19
June 2017 and accordingly in terms of clause 2.1 it would have been extended to June
2018. The other addendums annexure "D2 to D15" are all similar
(15] From a perusal of the agreements annexures "D1 to D14 and D15A " it appears
that they were all extended for a year during June 2017 after all the original
agreements had come to an end. On 29 June 2020 when this application was brought
an order was granted by this court, that the matter be adjourned to 16 September 2020
9
and that the interim extensions granted by Respondents for a period of three months
was accepted by Applicants without prejudice to any of their rights and without
concession that at least a year extension is required and without constituting a
novation of any of Applicants rights as contained in the agreements between
Applicants and Respondents .
[16] On 16 September 2020 a rule nisiwas granted returnable on 12 February 2021
that Respondents extend the contract periods in respect of annexures "D1 to D14 and
D15A" until a negotiated contract be concluded with each of First to Ninth Appl icants
and Fourteenth Applicant and until the implementation of the IPTF by the contracting
authority is finalised in respect of each of Tenth to Thirteenth and Fifteenth Applicants .
Further that Respondents extend the interim period in respect of the agreements for a
period of at least one year on each occasion which extensions would terminate when
there is a conclusion of a new negotiated contract with the operator in respect of each
of First to Ninth Applicants and Fourteenth Applicant and the implementation of the
IPTN by the contracting authority in respect of each of Tenth to Thirteenth and Fifteenth
and Sixteenth Applicants. The matter was at a later stage adjourned and the rule
extended to 27 August 2021 . Relief was granted to file supplementary affidavits and
Respondents were directed to provide further interim extensions until judgment is
delivered in the application .
[17] On 27 August 2021 all the applications and interdicts were adjourned to 11
March 2022. Provision was made for the filing of further affidavits and Respondents
were directed to provide further interim extension until the final determination of the
main and counter applications of all the agreements that have been referred to. In
terms of this order the Acting Head of Transport KwaZulu-Natal issued a letter
extending the contracts in terms of the order from 1 October 2025 to 31 March 2026.
extending the contracts in terms of the order from 1 October 2025 to 31 March 2026.
On 18 February 2025 an order was granted that the matter be adjourned sine die and
a ll previous orders and rule nisi issued be extended until finally disposed of and costs
reserved.
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[18] It is advisable at this stage to set out the specific sections which are referred to:
[19] Section 217 of the Constitution refers to procurement and reads as follows:
"1. When an organ of state in the national, provincial or local sphere of
government or any other institution identified in national legislation,
contracts for goods or services, it must do so in accordance with a
system which is fair, equitable, transparent, competitive and cost
effective.
2. Subsection (1) does not prevent the organ of state or institutions referred
to in that subsection from implementing a procurement policy providing
for:
(a) categories of preference in the allocations of contracts and
(b) the protection or advancement of persons or categories of
persons disadvantaged by unfair discrimination.
3. National legislation must prescribe a framework within which the policy
referred to in subsection 2 must be implemented."
[20] The Preferential Procurement Policy Framework Act 5 of 2000 (PFMA) which
commenced on 3 February 2000 in its heading states the following:
"To give effect to section 217(3) of the Constitution by providing a framework
for the implementation of the procurement policy contemplated in section
217(2) of the Constitution and to provide for matters connected therewith."
[21] The National Land Transportation Act 5 of 2009 (NLTA) in its heading states:
"To provide further the proce ss of transformation and restructuring the National
Land Transport System initiated by the National Land Tran s portation Transition
Act 2000 (Act 22 of 2000) and to provide for matters connected therewith.
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[22] Section 41 of the NLTA is as follows:
"Negotiated Contracts
1. Contracting authorities may enter into negotiated contracts with operators
in the areas once only, with the view to:
(a) Integrating services forming part of integrated public transport networks
in terms of the integrated transport plans;
(b) Promoting the economic empowerment of small business or of persons
previously disadvantaged by unfair discrimination or;
(c) Facilitating the restructuring of a parastatal of municipal transport
operator to discourage monopolies .
2. The negotiations envisaged by subsections (1) and (2) must where
appropriate include operators with the arear subject to interim contracts ,
subsidised service contracts , commercial service contract, existing
negotiated contracts and operators of unscheduled services and non
contracted services .
3. A negotiated contract contemplated in subsection (1) or (2) shall be for a
period of not longer than twelve years.
4. The contracts contemplated in subsection (1 ) shall not preclude a
contracting authority from inviting tenders for services forming part of the
relevant network.
5. Contracting authorities must take appropriate steps on a timeous basis
before expiry of such negotiated contracts to ensure that the services are
put out to tender in terms of section 42 in such a way as to ensure unbroken
service delivery passengers ."
[23] Section 46 of the NLTA reads as follows:
"Existing Contracting Arrangements
1. Where there is an existing interim contract, current tendered contract or
negotiated contract as defined in the Transition Act in the area of the
relevant contracting authority that authority may:
(a) Allow the contract to run its course or;
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(b) Negotiate with the operator to amend the contract to provide the
inclusion of the operator in an integrated public transport network or;
(c) Make a reasonable offer to the operator for alternative services or of a
monitory settlement which offer must bear relation to the value of the
unexpired portion of the contract if any.
2. In the parties cannot agree on amendment of the contract or on inclusion of
the operator in such a network, or the operator fails or refuses to accept
such an offer, the matter must be referred to mediation or arbitration in the
prescribed manner to resolve the issue.
3. The Minister may make regulations providing for the transition of existing
contracting arrangements and the transfer of the contracting function in
terms of this section or section 41, including the transfer or amendment of
existing permits or operating licences to give effect to the provisions of the
case of an assignment under section 11 (2).
4. In applying this section, the contracting authority must give due regard to
the rights of the worker employed by the operators in terms of the contract
contemplated in subsection (1)."
[24] Section 38(1)(a)(iii) of the Public Finance Management Act 1 of 1999 (PFMA)
stipulates:
"General Responsibilities of Accounting Officers
(1) The accounting officer for a department, trading entity or constitutional
institution:
(a) Must ensure that that department, trading entity or constitutional
institution has and maintains;
(i) .... .
(ii) ... .
(iii) an appropriate procurement and provisioning system which is fair
equitable , transparent , competitive and cost effective."
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[25) Treasury regulations in terms of the PFMA by the National Treasury and which
was published in the Government Gazette provides as follows in paragraphs 16.A.6.4:
"If in a specific case it is impractical to invite competitive bids, the account officer
or accounting authority may procure the required goods or services by other
means, provided that deviations from inviting competitive bids must be recorded
and approved by the accounting officer or accounting authority."
[26] It was submitted on behalf of Applicants that section 41 and 46 of the NLTA is
a deviation from the general government norm that procurement is put out to tender.
This results from the wording of section 41 which deals with negotiated contracts in
certain circumstances and for a specified period of time. Also section 46 deals with
existing contracting arrangements and negotiations that can take place and the
conditions under which this may be done. It is further contended that regulation 16A
6.4 of the PFMA also allows for the deviation by the accounting officer as it allows
specific cases when it is impactable to invite competitive bids. The accounting
authority can authorise that goods be aquired by means of a deviation from inviting
competitive bids and that it must be recorded and approved by the accounting officer
or authority.
[27] It was submitted that this does not offend section 217 of the Constitution and
accordingly that sections 41 and 46 of the NLTA fall within the ambit of section 217(2)
and 217(3) of the Constitution . It was further submitted that the PFMA regulates
financial management and is of general application and that the NLTA is industry
specific. There is therefore no inconsistency between the NLTA and the PFMA as they
deal with different issues. It is impractical to call for tenders where previously
disadvantaged persons cannot compete for lack of capabilities and experience .
[28) The Auditor General's argument is flawed as the expenditure by First
[28) The Auditor General's argument is flawed as the expenditure by First
Respondent's accounting authority relating to implementation of a negotiated contract
is authorised. Treasury instruction 3 of 2016/2017 issued pursuant to the PFMA was
never published in the Government Gazette as required and therefore it is of no force
14
and effect. It was further submitted that instruction 3 of 2021/2022 in terms of the
PFMA, which came into effect on 1 April 2022, in paragraph 4.1 deals with deviations
from the normal bidding process where it states "in a specific case it is impracticable
to invite competitive bids, VAO/OO may precure the required goods or services by
other means, provided that the reasons for deviating from inviting competitive bids
must be recorded and approved by the AO/AA." It was submitted that note 3 is in
conflict with regulation 16A6.4 and section 41 and 46 of the NLTA as it does not require
that it is only in an emergency situation.
[29] It is common cause that the IPTN has not been finalised nor that negotiated
contracts had been finalised . The situation was different in respect of the agreements
reached with the eThekwini Municipality. Operating outside eThekwini is Applicants 1,
2, 3, 4, 5, 6, 7, 8, 9 and 14. It was submitted that the counter application did not take
this distinction into account of the IPTN operators and the non IPTN operators as set
out above. Applicants have taken part in the transformation of subsidised transport
programs and persisted in transformation . Despite supporting transformation they
have not received finalised negotiated contracts .
[30] It was further submitted that First Respondent should have joined the
municipalities in their counter application .
[31] Applicants submit that section 217(2) of the Constitution allows for the
implementation of preferential procurement policies. It is an instrument for
transformation but within the ambit of section 217(3) which requires National
Legislation to prescribe a framework. It is further submitted that prior to the conclusion
of the impugned agreements the KZN Provincial Government and First Respondent
had already implemented a provincial procurement policy based on the NLTA and
specifically section 41 and 46 thereof which allows for negotiated contract models to
specifically section 41 and 46 thereof which allows for negotiated contract models to
protect and advance the interest of people disadvantaged by unfair discrim ination
within the transport industry.
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[32] It was submitted that there was no inconsistency between the NLTA and the
PMFA as the PMFA does not regulate subsidised transport services. In this regard I
was referred to the decision of Unico Ltd v Minister of Trade and Industry and other
1996 (6) BCLR798 (CC). In this matter it was held that before a provision in legislation
can rank as dominant over a subordinate or be subordinate to another there must be
a conflict or inconsistency or an incompatibility between them.
[38] Section 41 Negotiated Contract Model introduced by the NLTA provides an
alternative method for procurement and in this regard I was referred to the decision of
Golden Arrow Bus Service v City of Cape Town 418/13 (2013) ZASCA 152 at
paragraph 11 . After stating that the contract negotiated may only be once and for a
maximum period of twelve years it sets out that it allows the deviation from the
government norm in respect of private services which is that procurement is put out to
tender. In effect, it facilitates the quick implementation of the transport system in a
municipality. It is further submitted that in terms of Regulation 16A 6.4 of the Treasury
Legislations under the PFMA that where it is impracticable to invite competitive bids
the accounting officer of an institution may procure the requirement goods by other
means. There are certain conditions under which this may be done.
[34] The Auditor General found that the old order contracts which had expired and
which had been extended by the accounting officer also fell fowl of the treasury
instruction in note 3 of 2016/2017 and should have been extended by the Provincial
Treasury from 2016 to 2017. The Provincial Treasury condoned the conclusion of the
negotiated bus subsidy contracts. They were concluded in terms of section 41 . I was
also referred to the Minmec Resolutions of the meeting held on 20 April 2023 where it
was resolved that the extension of subsidised bus contracts for a period not exceeding
was resolved that the extension of subsidised bus contracts for a period not exceeding
three years from 1 April 2023 to allow for transition into new tendered and negotiated
contracts which ever is applicable .
[35] It was submitted on behalf of First Respondent that Applicants misconceive the
effect of the addendums annexures "01 to 01 SA" as they are not negotiated contracts .
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It was submitted that as appears from annexure "D1 " at page 56 in terms of clause 2.1
thereof that it was to continue rendering service for a period of one year unless a new
negotiated contract was entered into before the expiry date. In clause 3.1 it sets out
that the interim period shall terminate in accordance with clause 2.1 save that the
interim period shall be extended in the event that the negotiated contract with the
operator has not been finalised.
[36] It is submitted that this is an indeterminate period and that tendered contracts
have a fixed live span and therefore it cannot be reconciled with paragraph 3.1 of a
tendered contract. I was referred to a document entitled "Interim Contract No. IC35/97
Interim Contract for the Provision of Services by South Coast Bus Services (Pty) Ltd".
It was submitted the others had a common date and period. In clause 6 it sets out that
the operator shall commence the service at a specified date and that it will run for a
specified period as in the special conditions. In the special conditions referred to at
page 823 in paragraph 3 the commencement date is 1 April 1997 and the duration of
the contract was 154 weeks subject to clause 6 of the general conditions. It was
submitted that the agreement was accordingly until March 1999.
[37] At page 888 there are tender rules, the provisions of public passenger transport
services between certain areas in Vryheid under tender number ZNT1125/98T. In
paragraph 8 at page 908 it sets out that it shall commence at a date as set out in
clause 3 of the Special Conditions and run for the period as set out in clause 4 of the
Special Conditions. It sets out in 8.3 that the representative , may on instruction of the
employee , instruct the operator. At page 932 there are special conditions of contract
and what appears therefrom in paragraphs 3 and 4 is that there is a commencement
date and a duration period. It is therefore submitted that a contract cannot be never
date and a duration period. It is therefore submitted that a contract cannot be never
ending as that would be a violation of section 217 of the Constitution. It was submitted
that in terms of the Preferential Procurement Policy Framework Act all the contracts
a re invalid becaus e the y a re o pen ended .
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[38] It was submitted that the Auditor General was of the view that the provisions of
the PFMA superseded those of the NLTA if one has regard to the provisions of section
3(1 )(a)(iii) of the PFMA which expressly provides for the PFMA to prevail in the event
• of any inconsistency between the PFMA and other legislation.
[39] It was submitted on behalf of First Respondent that the Golden Arrow decision
was not what was submitted and was not authority for the proposition . Also the
application was not premised on the Minmec minutes and that the addendums were
based on subsidised services. It was submitted that the contracts were concluded , in
contravention of the relevant procurement legislative framework. The addendums
annexure "01 to 015A" were unlawful and the contracts had to go to tender. It was
submitted that the industry was dominated by a few families , that it was a monopoly
and that they whished this to continue . It was submitted that an order should be
granted in terms of the counter application.
[40] On behalf of Fourth Respondent it was submitted that as set out in the affidavit
of one Coetzee, the National Public Treasury Regulations under GNR25 in the
Government Gazette 273388 of 15 March 2005 applies. Regulation 16A.3 deals with
the development and implementation of a supply chain management system by
accounting officers for goods and services. It refers to National Treasury Instructions
SCM note 3 of 2016/2017 which has been contended has not been promulgated as it
was not published in the Government Gazette and this has not been disputed . It was
further contended that irrespective of the practice note 3 of 2017 /2017 the Provincial
Treasury would have to enforce the provisions of the PFMA. It was submitted that the
contracts are irregular as they are contrary to the provisions of section 217 of the
Constitution and section 38(1) of the PFMA. They can therefore not be extended .
[41 l In the event that the contracts are seen as emergency procurement the
[41 l In the event that the contracts are seen as emergency procurement the
procurement is a deviation from the norm and the approval from the relevant treasury
must be obtained. This has not been given but was declined. It was submitted that
the contracts sought to be extended are irregular, that they did not follow the
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procurement prescripts of the Constitution and the PFMA. The failure to do so renders
them irregular and invalid. They have also terminated by effluxion of time. It was
submitted that in terms of section 217 of the Constitution it must be competitive.
[42] Applicants seek an order in the form of a declarator that sections 41 and 46 of
the National Land Transport Act of 209 permits provincial departments of transport to
conclude negotiated contracts of bus operators without going to tender. A reading of
sections 41 and 46 of the NLTA indicates that indeed this can be done but in certain
limited circumstances. Therefore it appears to me on a reading of the two sections
that one cannot grant a blanket interdict that this can be done. It is only in the specific
instances as set out in sections 41 and 46 that it can be done. Also in terms of the
National Treasury Regulations published in the Government Gazette paragraph
16A.6.4 allows the accounting authority to procure services provided the deviation
from inviting competitive bids must be recorded and approved. Further in section 41 (4)
it specifically states that the contracts contemplated in section 41 shall not preclude a
contracting authority from inviting tenders for services forming part of the relevant
network.
[43] There was much debate in the papers and in argument whether the PFMA takes
precedence over the NLTA as it is of general application and the NLTA is industry
specific. In my view the NLTA takes precedence as it deals specifically with the
industry as the PMFA deals in general with public finance . In my view a section in an
Act cannot override the general rule of interpretation. In my view there is no
inconsistency between the NLTA and PMFA as they deal with different issues.
However due to the conclusion I reach this does not have to be dealt with any further.
[44] It was submitted on behalf o First Respondent that the relief in the notice of
[44] It was submitted on behalf o First Respondent that the relief in the notice of
motion was irregular as it was open ended. It is indeed not for a specific period but it
is not open ended as it is until the IPTN is instituted. There is therefore a cut off
although perhaps not ideal. I therefore do not agree that it is open ended. This also
is not necessary to consider further due to the conclusion I reach.
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[45] In terms of section 41 (3) of the NLTA the contract contemplated shall be for a
period of not longer than twelve years. A perusal of annexures "A 1 to A 15" indicate
that indeed the negotiated contracts ran for a period of twelve years. It is common
cause, they have lapsed by effluxion of time. Thereafter there were the addendums
to the contracts annexures "A 1 to A 15". The addendums do not appear to be
negotiated contracts but extensions of the contracts which have lapsed by effluxion of
time before the addendums were entered into. It was merely an extension of one year
to maintain the bus services in all the area. It is apparent from a reading of all the
papers that there has not been any new negotiated contracts between Applicants and
First Respondent. It was only the addendums which extended the service for a year
and at a later stage court orders extending them for a year until the court order, which
I refer to above, which extended the services to March 2026.
[46] Section 38(1 )(a)(iii) of the Public Finance Management Act 1 of 1999 (PFMA)
stipulates in section (1) that the accounting officer must maintain an appropriate
procurement and provisioning system which is fair, equitable, transparent , competitive
and cost effective. Section 16A.6.4 of the Treasury Regulations in terms of the PFMA
allows for a deviation when it is approved by the accounting officer or accounting
authority. It is common cause here that this was not done.
[47] The extension of the contracts for a year at a time for the same service provider
cannot be competitive or fair as there is no input from anyone else besides Applicants
and First Respondent and Treasury. In term of section 217(1) of the Constitution when
an organ of State in the National Provincial or Local Sphere of Government or any
other institution contracts for goods and services it must do so in accordance with a
system which is fair, equitable , transparent , competitive and cost effective.
system which is fair, equitable , transparent , competitive and cost effective.
[48] It was contended on behalf of Applicants that subparagraphs 2 and 3 of section
217 of the Constitution allows for the relief which they seek in the notice of motion. In
terms of subsect ion (2) an organ of State can implement a procurement policy
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providing for categories of preference, the allocations of contracts and the protection
or advancement of persons or categories of persons disadvantaged by unfair
discrimination. On an interpretation of this subsection it would appear to me that
subsection (2)(b) specifically states the advancement of persons or categories of
persons disadvantaged by unfair discrimination. If other operators are excluded it
does not appear that this requirement is fulfilled. The contracts had run for a period
of years and have also been extended on a yearly basis for a number of years
thereafter.
[49] Subparagraph (3) of section 217 of the Constitution sets out that National
Legislation must prescribe a framework within which the policy referred to in
subsection (2) must be implemented. In my view a reading of the PFMA and section
41 and 46 of the NLTA together with the Regulations indicate that this has been done
in that it prescribes the circumstances under which this can be done.
[50] If the contracts are to be extended indefinitely then this would be prejudicial to
other operators as they will not be given an opportunity to tender or to partake in the
process. There has been mention in the papers that Applicants have given up certain
routes and have also assisted by giving certain percentages of their routes to new
operators. This however does not comply with section 217.
[51] In my view the fact that there may not be any other operators who have the
necessary infrastructure to conduct the transport business is not an exclusion for not
going to tender. In the counter application it provides for a period of one year to take
account thereof. In the event that there are no bidders if it is put out to tender who
qualify for the contracts which is set out to tender then indeed it may be appropriate to
apply the provisions of section 41 and 46 in those circumstances as exceptional to
allow for deviation .
------ - ------ --- --
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[52] It would accordingly on a reading of section 217 of the Constitution appear to
me that the addendums are contrary to the provisions of section 217 of the Constitution
and section 38(1) of the PMFA. It is not an emergency procurement and a deviation
from the norm and the approval of Treasury must be obtained . This was declined. As
already stated they were terminated by effluxion of time and the addendums are not
contracts but merely extensions and in my view on a reading of section 217 of the
Constitution and applying the principles of interpretation section 217 of the Constitution
clearly indicates that it must be competitive and fair. In this case if the contracts are
merely extended it cannot be competitive nor fair. It excludes operators who are
unknown at this stage who may qualify and want to take part in any tender and are in
a position to do so.
[53] The orders sought in the counter application in paragraph 4 of the notice of
motion of the counter application allows for a period of one year for the cancellation of
the existing contracts pending the tender procedure. Also in paragraph 6 it allows for
Applicants to continue granting the services for the period of one year from the granting
of this order. It also provides for the position where the tender is not awarded during
that period. It therefore provides that the services provided to the public does not
immediately come to an end.
[54] It allows for a competitive bidding process. This is open to any operator who is
in a position to qualify for the tender and in a position to provide the necessary
services. This in my view is in line with the provisions of the Constitution and will
prevent a mere continuation of the present situation which has just been an extension
every year and excludes other operators from these contracts.
[55) The main application must therefore fail and an order be granted in terms of the
notice of motion of the counter application . The matter has been dealt with on various
notice of motion of the counter application . The matter has been dealt with on various
occasions and various costs orders have been made. I was only addressed by
Applicants in respect of a cost order for Mr. Moodley who appeared at the start of the
matter. There was no opposition thereto nor was there any further argument about
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the costs that may have been reserved in this matter. First Respondent only sought a
cost order in the event that Applicants opposed the counter application which they
have done. This to be the costs of 3 counsel. Fourth Respondent was joined as a
party to these proceedings and is accordingly entitled to oppose the said application.
Due to the order in this matter the costs of Moodley is not an issue.
Order:
1. The rule nisi granted on 16 September 2020 is discharged.
2. The application by Applicants is dismissed with costs.
2.1 Such costs to include the costs of 3 counsel for First Respondent on
Scale C.
2.2 The costs of Fourth Respondent on Scale C.
3. An order is granted in terms of the notice of motion of the counter application
by First Respondent as set out in paragraph 6 of this judgment (pages 1154 of
the papers) together with the costs of 3 counsel on Scale C.
P C BEZUIDENHOUT J.
JUDGMENT RESERVED ON:
JUDGMENT HANDED DOWN ON:
10 OCTOBER 2025
19 MAY 2026
COUNSEL FOR APPLICANTS :
Instructed by:
A E FRANKLIN SC
L E COMBRINK SC
J P PRETORIUS
Cuzen Randeree Dyasi Inc
Johannesb urg
Email: suhail@crdinc.co.za
nabeela@crdinc.co.za
zain@crdinc.co.za
Ref: Z Randeree
C/O: PGPS Attorneys
Pietermaritzburg
Tel: 033 815 1572
Email: arashni@pgpslaw.co.za
Ref: No. Rob Stuart-Hill/Arashn i
COUNSEL FOR FIRST RESPONDENT: M T K MOERANE SC
T S I MTHEMBU SC
The State Attorney (KwaZulu-Natal) Instructed by:
Ms T Maphumulo
Durban
Tel: 031 365 2544
-------
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Emai l: thmaphumulo@justice .gov.za
Ref: 17 /0012458/21 /S/P9/ncm
C/O: State Attorney (Satellite Office)
Pietermaritzburg
COUNSEL FOR FOURTH RESPONDENT: A J DICKSON SC
Instructed by: Matthew Francis Inc.
Pietermaritzburg
Tel: 033 459 1488
Email : yri@mfi law.co.za
Ref: Y maha raj/SS
24