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[2014] ZACC 12
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Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (No 2) [2014] ZACC 12; 2014 (6) BCLR 641 (CC); 2014 (4) SA 179 (CC) (17 April 2014)
Links to summary
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 48/13
In
the matter between:
ALLPAY
CONSOLIDATED
INVESTMENT
HOLDINGS (PTY)
LTD
.....................................................................
First
Applicant
ALLPAY
FREE STATE (PTY)
LTD
.......................................................................
Second Applicant
ALLPAY
WESTERN CAPE (PTY)
LTD
...................................................................
Third
Applicant
ALLPAY
GAUTENG (PTY)
LTD
...........................................................................
Fourth Applicant
ALLPAY
EASTERN CAPE (PTY)
LTD
....................................................................
Fifth
Applicant
ALLPAY
KWAZULU-NATAL (PTY)
LTD
...............................................................
Sixth
Applicant
ALLPAY
MPUMALANGA (PTY)
LTD
................................................................
Seventh
Applicant
ALLPAY
LIMPOPO (PTY)
LTD
..............................................................................
Eighth
Applicant
ALLPAY
NORTH WEST (PTY)
LTD
.........................................................................
Ninth
Applicant
ALLPAY
NORTHERN CAPE (PTY)
LTD
...............................................................
Tenth
Applicant
MICAWBER
851 (PTY)
LTD
.............................................................................
Eleventh Applicant
MICAWBER
852 (PTY)
LTD
................................................................................
Twelfth Applicant
MICAWBER
853 (PTY)
LTD
.............................................................................
Thirteenth Applicant
MICAWBER
854 (PTY)
LTD
............................................................................
Fourteenth
Applicant
and
CHIEF
EXECUTIVE OFFICER OF THE
SOUTH
AFRICAN SOCIAL SECURITY
AGENCY
...........................................
First Respondent
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
......................................
Second Respondent
CASH
PAYMASTER SERVICES (PTY)
LTD
...................................................
Third Respondent
EZIDLUBHEDU
INVESTMENT HOLDINGS (PTY) LTD
.................................
Fourth
Respondent
FLASH
SAVINGS AND CREDIT
COOPERATIVE
...............................................
Fifth
Respondent
ENLIGHTENED
SECURITY FORCE (PTY)
LTD
...............................................
Sixth Respondent
MOBA
COMM (PTY)
LTD
.................................................................................
Seventh Respondent
EMPILWENI
PAYOUT SERVICES (PTY)
LTD
................................................
Eighth
Respondent
PENSION
MANAGEMENT (PTY)
LTD
.............................................................
Ninth
Respondent
MASINGITA
FINANCIAL SERVICES (PTY)
LTD
...........................................
Tenth
Respondent
SOUTH
AFRICAN POST
OFFICE
..................................................................
Eleventh Respondent
ROMAN
PROTECTION SOLUTIONS
CC
......................................................
Twelfth
Respondent
UBANK
LIMITED
........................................................................................
Thirteenth Respondent
AFRICAN
RENAISSANCE INVESTMENT
MANAGEMENT
(PTY)
LTD
.....................................................................
Fourteenth
Respondent
STANDARD
BANK GROUP
LIMITED
.......................................................
Fifteenth
Respondent
NEW
SOLUTIONS (PTY)
LTD
....................................................................
Sixteenth
Respondent
ITHALA
LIMITED
....................................................................................
Seventeenth
Respondent
KTS
TECHNOLOGY SOLUTIONS
CONSORTIUM
.............................
Eighteenth
Respondent
and
CORRUPTION
WATCH
................................................................................
First
Amicus Curiae
CENTRE
FOR CHILD
LAW
.........................................................................
Second
Amicus Curiae
Neutral
citation:
AllPay Consolidated
Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of
the South African Social Security Agency
and Others (No 2)
[2014]
ZACC 12
Coram:
Moseneke ACJ, Cameron J, Dambuza AJ, Froneman J,
Jafta J, Khampepe J, Madlanga J, Majiedt AJ, Van der Westhuizen J and
Zondo J
Heard
on:
11 February 2014
Decided
on:
17 April 2014
Summary:
Remedy – unlawful tender –
just and equitable remedy – tender set aside – new tender
ordered – existing
contract to remain in place until final
decision on whether to award new tender
ORDER
Judgment
on the just and equitable remedy arising from this Court’s
order in
AllPay Consolidated Investment
Holdings (Pty) Ltd and Others v Chief Executive Officer of the South
African Social Security Agency
and Others
[2013] ZACC 42
;
2014 (1) SA 604
(CC) declaring that the tender was
invalidly awarded.
The
Contract for the Payment of Social Grants between the South African
Social Security Agency and Cash Paymaster Services (Pty)
Ltd is
declared invalid. The declaration of invalidity is suspended pending
the decision whether to award a new tender after the
tender process
is re-run. The full order is at [78].
JUDGMENT
FRONEMAN
J (Moseneke ACJ, Cameron J, Dambuza AJ, Jafta J, Khampepe J, Madlanga
J, Majiedt AJ, Van der Westhuizen J and Zondo J concurring):
Introduction
[1]
This
judgment deals with the remedy that should follow upon the judgment
on the merits.
[1]
This Court
declared the award of the tender by the South African Social Security
Agency (SASSA) to the third respondent, Cash Paymaster
Services (Pty)
Ltd (Cash Paymaster), constitutionally invalid.
[2]
The declaration of invalidity was based on two grounds. The first was
that SASSA failed to ensure that the empowerment credentials
claimed
by Cash Paymaster were objectively confirmed.
[3]
The second was that Bidders Notice 2 did not specify with
sufficient clarity what was required of bidders in relation to
biometric verification,
[4]
with
the result that only one bidder was considered in the second stage of
the process. This rendered the process uncompetitive
and made any
comparative consideration of cost-effectiveness impossible.
[5]
[2]
Section 172(1)(b) of the Constitution
provides that following upon a declaration of constitutional
invalidity a court—
“
may
make any order that is just and equitable, including—
(i)
an order limiting the retrospective effect of the declaration of
invalidity; and
(ii)
an order suspending the declaration of invalidity for any period and
on any conditions, to allow the competent authority to
correct the
defect.”
[3]
Paragraph 4 of the order suspended the
declaration of invalidity pending the determination of a just and
equitable remedy. In
paragraph 5 the parties were directed to
provide factual information and written submissions for the purpose
of determining a just
and equitable remedy. A further oral
hearing took place on 11 February 2014.
[4]
The structure of this judgment is as
follows. First, I set out a summary of the factual information
provided by the parties and
their submissions about the appropriate
remedy. I then consider the proper legal approach to determining a
just and equitable remedy
in the procurement context. I will deal
with each of the relevant aspects relating to that before coming to a
final conclusion
on the appropriate remedy. At the outset it is
necessary to say that the remedy will not disrupt the payment of
existing grants.
Factual
information and submissions
[5]
The
information provided by the parties and their submissions are
helpful. There are, however, disputes about the relevance
and
correctness of certain facts. The provisions allowing the
receipt of factual information in this Court
[6]
do not cater for the resolution of disputed evidence. The order
we make is not dependent on any factual finding in relation
to
disputed facts. Nevertheless, the uncontested information
provides a useful background for determining a just and equitable
remedy.
[6]
AllPay
Consolidated Investment Holdings (Pty) Ltd (AllPay) recognised that
SASSA and Cash Paymaster were best positioned to assess
the time,
necessary steps and cost implications of a new tender process. It
did, however, commission reports from various experts
to gather
factual information in support of what it envisages should take place
in the event that a fresh tender is ordered.
[7]
The best indication of the time and steps required for a new
tender process to take place is to consider what was required
in the
previous tender. On that basis, AllPay contended that an
entirely new tender process, from the amendment of the Request
for
Proposals to the handover to the successful tenderer, could be
concluded in no more than nine and a half months.
[7]
The key question is whether the
implementation of a new system would cost SASSA more than it is
currently paying for the service.
Because the cost of ordering
a fresh tender is the normal consequence of an unlawful tender
process, any expense considerations
must be viewed in the light of
the benefits of a more competitive tender. This underlies the
principle in section 217 of
the Constitution that fair public
tendering leads to more cost-effective solutions.
[8]
The
expert evidence proffered by AllPay
[8]
suggests
that, had it been awarded the tender instead of Cash Paymaster, SASSA
would have saved approximately R926 million
over five years.
AllPay contends that the price discrepancy between Cash Paymaster’s
and AllPay’s original offerings
makes it clear that there may
be significant financial benefits to running a fresh tender. On
this basis the cost of re doing
the tender may well be recouped
by the state receiving a more cost-effective solution. The
expert contends that, even on
conservative assumptions,
Cash Paymaster has, after just two years, already covered all
its costs in implementing the tender
and is actually making a
profit. By the time a new tender process is implemented, Cash
Paymaster would have earned a reasonable
internal rate of return on
its investment.
[9]
AllPay also argued that the current system
is far from perfect. As a result, it contends that Cash
Paymaster is not providing
the best service and that beneficiaries
are forced to endure a sub-optimal system for which SASSA is paying
more than it should.
Because Cash Paymaster has already
embarked on a bulk enrolment process, including the collection of
biometric data, which
is now owned by SASSA, there is no reason why a
new successful bidder could not take this over. The new
tenderer could thus
make use of that information to allow for a
seamless takeover of the current payment of beneficiaries without the
need for a large
scale re-enrolment of all beneficiaries.
[10]
AllPay submitted that, in the ordinary
course, effective remedial relief must follow a declaration of
unlawfulness.
If
the
rule of law is to be vindicated, the starting point must be the
re-running of the tender process. Given the nature and
materiality of the irregularities, the only just and equitable remedy
is one that suspends the declaration of invalidity and allows
for a
fresh tender process to run, with a revised Request For Proposals and
with prospective bidders being allowed to submit fresh
bids.
Cash Paymaster’s contract with SASSA should be kept in place
until the successful bidder is able to take over.
This will
ensure the uninterrupted payment of social grants to beneficiaries
and also provide Cash Paymaster with the chance to
mitigate any
prejudice that would arise if the award to it were invalidated with
immediate effect.
[11]
AllPay
contended that, pending the outcome of the new tender process,
Cash Paymaster would not be entitled to “walk away”
from the existing contract – it is effectively the government’s
agent for the provision of social grants and therefore
has a
constitutional obligation to protect the interests of the
beneficiaries by continuing to perform under its existing contract
with SASSA.
It
would also be unlawful for Cash Paymaster to resile from the
contract. This is because the effect of the interim suspension
of the declaration of invalidity would be that the parties remain
bound by the existing contract until the new contract becomes
operational. However, if Cash Paymaster were to refuse to
perform under its current contract, emergency arrangements
could be
put in place to ensure that beneficiaries are paid. In
particular, SASSA would be entitled to enter into an emergency
contract in terms of the relevant treasury regulations.
[9]
[12]
SASSA’s
starting premise, like AllPay’s, was that a new tender would
need to follow largely the same process as the
first tender.
This process took nearly three years with an overall cost of
approximately R6 million.
[10]
Based on the previous process, SASSA estimated that the total time
for implementing a new system would be not less than 24
months and
would cost between R5 million and R10 million.
[13]
SASSA
pointed out that its contract with Cash Paymaster was intended to be
the last time that it outsourced its obligation to pay
social grants,
since it intends to take over the system by April 2017. An
advisory committee is currently analysing the possible
ways that
SASSA may take over the payment system by that time. If a new
tender were to be awarded it would therefore have
to be for a much
shorter period than five years.
[11]
Moreover, for any tenderer to recoup the pre-implementation costs,
the price of a shorter tender would have to be significantly
higher.
Any delays attributed to a new service provider would also hamper
SASSA’s own target of being self sufficient
by 2017.
[14]
SASSA maintained that the current services
are being provided in an efficient and uninterrupted way. Nearly 21
million people (99.76%
of beneficiaries) have been re-enrolled under
the new system. The registration process has resulted in the
Department of Social
Development declaring unspent funds of R2
billion and the service fees have been reduced from R32 per person to
R16.44 per person.
This will result in a saving of R800 million per
year.
[15]
SASSA argued that, because of the practical
implications, the tender should not be set aside. The Court has
an obligation
to declare the award of the tender constitutionally
invalid, but that does not necessarily require that the contract with
Cash Paymaster
be set aside.
[16]
The public has an interest in having a
procedurally correct process, but this must be balanced against the
essential need for uninterrupted
service delivery in line with the
obligations under sections 27 and 28 of the Constitution. SASSA
contended that the contract is
too far advanced to be undone, and
that it is strongly in the interests of grant beneficiaries that the
contract be allowed to
run to completion. There has been no finding
of fraud or corruption, and little or no loss to the unsuccessful
tenderers, who in
all likelihood would not have won the tender even
under a different process.
[17]
However, SASSA contended that, if the Court
were to declare the contract invalid, its declaration should be
suspended for three
years, until the contract expires. If the
Court were to set aside the tender before the expiration of the
current contract,
given the time it would take to run a new tender
process, the declaration of invalidity should be suspended for two
years, which
would allow SASSA sufficient time to take over the
administration of the payment system.
[18]
Cash Paymaster also accepted that it is not
best placed to indicate how long a new tender process would take and
what the costs
involved would be. It estimates that it would
take at least 12 months to prepare, issue and adjudicate a new
tender.
On the costs involved, Cash Paymaster offered no
comment and alluded only to the capital expenditure of R1.3 billion
it has already
incurred. It highlighted potential difficulties
with the availability of the required technology and infrastructure,
the
issuing of new smart cards, the probable re-registration of
beneficiaries and the likelihood that new bank accounts will need to
be opened.
[19]
It indicated that, if its contract were to
be cancelled, it would be willing to assist a new tenderer during the
transition. However,
this was conditional upon payment for its
services in terms of the current contract and on the basis that its
facilitation of a
takeover would not result in the erosion of
intellectual property rights. Cash Paymaster emphasised that
additional obligations
to facilitate the takeover would have
financial implications for it – and would be caused by
SASSA’s, rather than its own, administrative
irregularities. In the event of an expedited termination,
Cash Paymaster
submitted that it
would
face financial exposure of R41.5 million (if terminated within
six months) or R32 million (if terminated within 12 months).
[20]
Cash Paymaster submitted that any remedy
granted should not result in an interruption in payment services; any
decrease in the quality
of the service currently enjoyed by
recipients or any other inconvenience; or uncertainty in respect of
the on going payment
of grants. The only remedy that would
guarantee this, and thus the one that is just and equitable in the
circumstances, is
to allow Cash Paymaster to run its contract to
completion. This can be achieved either by declining to set
aside the contract
or suspending any order setting it aside for the
remainder of the contract period.
[21]
Cash
Paymaster submitted that, in terms of sections 3 and 4(1)(a) of the
South African Social Security Agency Act
[12]
(Agency Act), SASSA is statutorily empowered to act as the sole agent
to ensure the efficient and effective management of the
administration of the grants. It thus asserted that SASSA is
best placed to make a decision on the feasibility of a new tender.
[22]
Cash Paymaster indicated that it is no
longer of critical importance to determine whether it is
constitutionally bound to distribute
social grants, as it has
undertaken to do so subject to certain conditions. However, it argued
that sections 27(1)(c) and 28(1)(c)
are not binding on it, at
least not to the extent that it is duty-bound to continue to provide
a public service on behalf of the
state and to expend its own
resources under terms to which it has not agreed.
[23]
Corruption Watch drew attention to the
composition of the decision-making bodies in a fresh bid process.
SASSA was requested to
provide information relating to the steps
taken, if any, to investigate the irregularities. While SASSA
undertook to provide the
information, none has been forthcoming, and
Corruption Watch remains concerned about the irregularities that
occurred in the tender
process.
[24]
Corruption Watch did not make firm
proposals on the appropriate remedy. It raised more general rule of
law concerns. Prejudice to
third parties is relevant but not
determinative and, while damage to the public is a major concern, a
court should be slow to conclude
that there is no possible order that
sets the tender award aside and also adequately protects members of
the public.
[25]
In oral argument, Corruption Watch proposed
that this Court should declare the contract invalid unless it is
satisfied that there
is a real risk that setting it aside will lead
to significant prejudice and that the risk cannot be ameliorated.
[26]
The other amicus curiae, the Centre for
Child Law (Centre), expressed a preference to suspend the declaration
of invalidity until
the end of the existing contractual period.
The Centre’s basic premise is that it would be inappropriate
for the Court
to order a new tender if it would result in a new
registration process.
[27]
According to the Centre, the relevant
factors when considering setting the tender aside are the―
(a)
interest of beneficiaries in the
uninterrupted payment of social grants, especially that of children;
(b)
cost to the public purse versus the proper
use of public funds; and
(c)
need to promote respect for the rule of
law, including both the value of deterrence and the maintenance of
and respect for a fair
and lawful procurement system.
It
lays the strongest emphasis on the first consideration.
[28]
The Centre also contended that Cash
Paymaster would be under a contractual and constitutional duty to
continue to administer the
social grants until a new tender has been
awarded. The Centre urged the Court to supervise the
implementation of any order
that sets aside or shortens the duration
of the contract, so as to ensure that the interests of beneficiaries
are protected.
Proper
approach to remedy
[29]
In
Steenkamp
Moseneke DCJ stated:
“
It
goes without saying that every improper performance of an
administrative function would implicate the Constitution and entitle
the aggrieved party to appropriate relief. In each case the remedy
must fit the injury. The remedy must be fair to those affected
by it
and yet vindicate effectively the right violated. It must be just and
equitable in the light of the facts, the implicated
constitutional
principles, if any, and the controlling law. It is nonetheless
appropriate to note that ordinarily a breach of administrative
justice attracts public-law remedies and not private-law remedies.
The purpose of a public-law remedy is to pre-empt or correct
or
reverse an improper administrative function. . . . Ultimately the
purpose of a public remedy is to afford the prejudiced party
administrative justice, to advance efficient and effective public
administration compelled by constitutional precepts and at a
broader
level, to entrench the rule of law.”
[13]
(Footnote omitted.)
The
emphasis on correction and reversal of invalid administrative action
is clearly grounded in section 172(1)(b) of the Constitution,
where
it is stated that an order of suspension of a declaration of
invalidity may be made “to allow the competent authority
to
correct
the defect
.”
Remedial correction is also a logical consequence flowing from
invalid and rescinded contracts
[14]
and enrichment law generally.
[15]
[30]
Logic,
general legal principle, the Constitution, and the binding authority
of this Court all point to a default position that requires
the
consequences of invalidity to be corrected or reversed where they can
no longer be prevented. It is an approach that
accords with the
rule of law and principle of legality.
[16]
[31]
In the merits judgment this Court stated:
“
Once
a finding of invalidity . . . is made, the affected decision or
conduct must be declared unlawful and a just and equitable
order must
be made. It is at this stage that the possible inevitability of
a similar outcome, if the decision is retaken,
may be one of the
factors that will have to be considered. Any contract that
flows from the constitutional and statutory
procurement framework is
concluded not on the state entity’s behalf, but on the public’s
behalf. The interests
of those most closely associated with the
benefits of that contract must be given due weight. Here it
will be the imperative
interests of grant beneficiaries and
particularly child grant recipients in an uninterrupted grant system
that will play a major
role. The rights or expectations of an
unsuccessful bidder will have to be assessed in that context.”
[17]
[32]
This corrective principle operates at different levels. First,
it must be applied to correct the wrongs that led to the
declaration
of invalidity in the particular case. This must be done by
having due regard to the constitutional principles
governing public
procurement, as well as the more specific purposes of the Agency Act.
Second, in the context of public-procurement
matters generally,
priority should be given to the public good. This means that
the public interest must be assessed not
only in relation to the
immediate consequences of invalidity – in this case the setting
aside of the contract between SASSA
and Cash Paymaster – but
also in relation to the effect of the order on future procurement and
social-security matters.
[33]
The primacy of the public interest in procurement and social-security
matters must also be taken into account when the rights,
responsibilities, and obligations of all affected persons are
assessed. This means that the enquiry cannot be
one dimensional.
It must have a broader range.
[34]
Corruption
Watch proposed that we should articulate a general formulation for
when it would be just and equitable to deviate from
the corrective
principle.
For
the moment, I only wish to point out that a general statement of this
kind may not be desirable or even feasible once it is
accepted that
the application of the corrective principle is not uniform.
[18]
The corrective principle may be capable of implementation at certain
levels, but not others.
[35]
In the discussion that follows, I will first consider the practical
difficulties raised as obstacles to ordering a new tender
process,
before dealing with the alleged legal problems in that regard.
Practical
difficulties
[36]
SASSA
and Cash Paymaster argued that the risk of disruption to
beneficiaries militates against declaring the contract invalid.
Similarly, the Centre submitted that the only just and equitable
remedy would be one that ensures the timely and uninterrupted
payment
of social grants to beneficiaries. If the contract were
declared invalid, it contended, the only guarantee against
disruption
would thus be to suspend the declaration of invalidity until the end
of the contractual period. To strengthen
its argument, the
Centre submitted that the interests of children are of particular
importance.
[19]
A
significant proportion of social-grant beneficiaries are children.
This means that any assessment of the possible
disruption in the
payment process should be the subject of even greater scrutiny where
the rights of children are at stake.
[37]
To this SASSA and Cash Paymaster added that
the system is in any event working well and that there is no
realistic possibility that
anyone else would be able to take over.
This argument must be rejected. The judgment on the merits showed
that the irregularities
prevented a proper competitive process
because no price comparison could in the end be made.
[38]
The likelihood of a disruption of payments
to beneficiaries is disputed. So are a number of other issues,
including the extent
to which SASSA will be able to take over the
administration and payment of social grants at the end of the current
contract period.
These disputed factual issues cannot be
determined by us in these proceedings.
[39]
I have alluded to the multi-dimensional
aspects of the just and equitable enquiry. Factual disputes, at
a practical level,
add another dimension to be considered. In
these circumstances, a just and equitable remedy will not always lie
in a simple
choice between ordering correction and maintaining the
existing position. It may lie somewhere in between, with
competing
aspects assessed differently. The order made at the
end of this judgment is of this kind.
[40]
The order makes provision for a re-run of
the tender, but it does not attempt to impose a final solution on
SASSA. We acknowledge
that we are not in a position to
determine what the effect of making a new tender award will be on a
number of interests. These
include: the ability of other
potential tenderers to make truly competitive bids; whether a new
system will necessarily disrupt
existing payments; whether SASSA will
be able to run the administration and payment of social grants
independently at the time
envisaged; and what advantages
Cash Paymaster may derive from its incumbency. A new
tender process will make it possible
for SASSA to have more
information available to it when it makes a decision whether to award
a new tender at the end of the process.
It is true that this
will come at some cost, between R5 million and R10 million at
current estimates, but in the context of
the vast sums involved, and
considering the potential for a more cost-effective solution, this is
a justifiable price to pay to
ensure that the rule of law and the
demands of transparency and accountability are met.
[41]
This practical approach also meets the argument made by SASSA that
ordering a new tender process for the original period, namely
five
years, would impinge on the separation of powers because SASSA
intends to take over in 2017.
Separation
of powers
[42]
There
can be no doubt that the separation of powers attributes
responsibility to the courts for ensuring that unconstitutional
conduct is declared invalid and that constitutionally mandated
remedies are afforded for violations of the Constitution. This
means that the Court must provide effective relief for infringements
of constitutional rights.
[20]
On this basis, there can be no question that requiring SASSA to
re-run the tender falls squarely within this Court’s
remit.
What the public lost in the flawed tender process was the
chance to secure a contract with the most competitive and
cost-effective tenderer, as the merits judgment explained.
[43]
As counsel for AllPay was at pains to point out, if the tender
process is re-run without extending the duration of the new
contract
beyond the current period, Cash Paymaster will have an
insuperable advantage because of its incumbency. In
fact, as
SASSA explained it is probable that no one else would even bid,
because only a long-term contract could conceivably be
profitable.
This is because a long period is essential to recoup the
tenderer’s huge initial outlay.
[44]
This means that re-running the tender without specifying an extended
contract period of at least five years would simply perpetuate
the
consequences of the unlawful tender award to Cash Paymaster. Far
from providing “effective relief”, this
would entrench
the unlawfully obtained status quo. Ordinarily, the term of a
procurement contract would be within the powers
of the executive.
Here, however, the facts require a different approach. It
would be just and equitable to specify
that the term of the fresh
tender be for five years.
[45]
Hence, the answer to the separation of powers argument lies in the
express provisions of section 172(1) of the Constitution.
The
corrective principle embodied there allows correction to the extent
of the constitutional inconsistency, in this case,
an invalid award
of the tender for five years.
[46]
This approach would have the added benefit of providing SASSA with a
renewed opportunity of considering and assessing all the
practical
risks during the renewed tender process.
Constitutional
obligations
[47]
In
terms of section 27(1)(c) of the Constitution everyone has the
fundamental right to “have access to social security,
including,
if they are unable to support themselves and their
dependants, appropriate social assistance.” Section 27(2)
states
that “[t]he state must take reasonable legislative and
other measures, within its available resources, to achieve the
progressive
realisation of this right.”
[21]
The state has done so. The Social Assistance Act
[22]
(Assistance Act) makes provision for social assistance.
[23]
Chapter 3 deals with the administration of social assistance,
including payments to beneficiaries.
[24]
[48]
SASSA
must, under the Agency Act, administer social assistance in terms of
Chapter 3 of the Assistance Act.
[25]
The objects of SASSA are to act, eventually, as the sole agent
for the administration of social assistance, but also to act
as an
agent for the prospective administration and payment of social
security.
[26]
SASSA may,
with the concurrence of the responsible Minister, enter into an
agreement with any person to ensure effective
payments to
beneficiaries.
[27]
The
agreement must include provisions to ensure the effective and
economical use of funds for payment to beneficiaries; the
promotion
and protection of the human dignity of beneficiaries; the protection
of confidential information held by the Agency;
honest, impartial,
fair and equitable service delivery; mechanisms to regulate community
participation and consultation; and financial
penalties for
non-compliance.
[28]
[49]
Organs
of state have obligations that extend beyond the merely
contractual.
[29]
In
terms of section 8 of the Constitution, the Bill of Rights binds all
organs of state. Organs of state, even if not
state departments
or part of the administration of the national, provincial or local
spheres of government, must thus “respect,
protect, promote and
fulfil the rights in the Bill of Rights”.
[30]
[50]
The
founding values of our Constitution include a democratic government
based on the principles of accountability, responsiveness
and
openness.
[31]
The
public administration, which includes organs of state,
[32]
“
must
be accountable”,
[33]
and
“[t]ransparency must be fostered by providing the public with
timely, accessible and accurate information.”
[34]
[51]
Section 239 of the Constitution defines an
“organ of state” as—
“
(a)
any department of state or administration in the national, provincial
or local sphere of government; or
(b)
any other functionary or institution—
(i)
exercising a power or performing a function in terms of the
Constitution or a provincial constitution; or
(ii)
exercising a public power or performing a public function in terms of
any legislation,
but
does not include a court or a judicial officer”.
[52]
That
SASSA is an organ of state is clear. But, for the purposes of
the impugned contract, so too is Cash Paymaster.
In determining
whether an entity is an organ of state, the presence or absence of
governmental control over that entity is a factor,
but in our
constitutional era, is not determinative.
[35]
In
Cash Paymaster’s case the “control test” is not
helpful; although it may be independent from SASSA’s
control,
the function that it performs – the country-wide administration
of the payment of social grants – is fundamentally
public in
nature.
[53]
In
AAA
Investments
[36]
Yacoob J, writing for the majority of this Court,
[37]
stated:
“
Our
Constitution ensures . . . that government cannot be released from
its human rights and rule of law obligations simply because
it
employs the strategy of delegating its functions to another entity.
It
does so by a relatively broad definition of an organ of state. . . .
An organ of state is, among other things, an entity
that
performs a public function in terms of national legislation. If
[an entity] performs its functions in terms of national
legislation,
and these functions are public in character, it is subject to the
legality principle and the privacy protection. In
our
constitutional structure, [the entity] does not have to be part of
government or the government itself to be bound by the Constitution
as a whole.”
[38]
(Footnotes omitted.)
[54]
SASSA
must administer social assistance in terms of the Assistance Act. It
is legislation that seeks to give effect to the
right of access to
social security in terms of section 27(1)(c) and (2) of the
Constitution. SASSA may enter into an agreement
with any person “to
ensure effective payments to beneficiaries” in terms of
section 4(2)(a) of the Agency Act.
In terms of the
agreement between SASSA and Cash Paymaster the latter administers the
payment of social grants on SASSA’s
behalf. In doing so,
Cash Paymaster exercises a public power and performs a public
function in terms the Agency Act, enacted
to give effect to the right
to social security.
[39]
[55]
But
it does more than that. It plays a unique and central role as the
gatekeeper of the right to social security and effectively
controls
beneficiaries’ access to social assistance. For all
practical purposes it is not only the face, but also the
operational
arm, of the “administration in the national . . . sphere of
government”,
[40]
insofar
as the payment of social grants is concerned.
[56]
The contract between SASSA and Cash Paymaster also makes it
clear that the latter undertook constitutional obligations
.
The Request for Proposals further stipulates that the tender is
subject to the Constitution. The contract itself indicates
that
the Request for Proposals forms part of the contract and was
incorporated by reference. The preamble of the contract
states
that “SASSA is in terms of the applicable legislative framework
responsible for the administration, management and
payment of social
grants in line with the Constitution”.
[57]
These public aspects of the procurement
contract have important constitutional consequences for both SASSA
and Cash Paymaster.
[58]
SASSA
does not, by the conclusion of the contract, divest itself of its
constitutional responsibility and public accountability
for rendering
the public services.
[41]
It remains accountable to the people of South Africa for the
performance of those functions by Cash Paymaster. In its
own
case, accountability is ensured by financial compliance with the
Public Finance Management Act
[42]
and general ministerial oversight.
[43]
[59]
When Cash Paymaster concluded the contract
for the rendering of public services, it too became accountable to
the people of South
Africa in relation to the public power it
acquired and the public function it performs. This does not
mean that its entire
commercial operation suddenly becomes open to
public scrutiny. But the commercial part dependent on, or
derived from, the
performance of public functions is subject to
public scrutiny, both in its operational and financial aspects.
[60]
These general principles must inform and
underlie the discussion of whether the present contract should be set
aside and a re-run
of the tender process ordered. They are also
relevant for determining the temporary arrangements if the award of
the tender
is set aside but suspended.
Invalidity
and suspension of the contract
[61]
Both SASSA and Cash Paymaster submitted
that a re-run of the tender process would create legal difficulties,
because the Court has
no power to make a contract for SASSA and Cash
Paymaster, or to amend the existing contract. If the existing
contract is
declared invalid Cash Paymaster would have no further
obligations towards anyone and would be entitled to walk away from
the contract
without any sanction for doing so. This submission
cannot be sustained.
[62]
The answer lies, first, in the explicit
wording of section 172(1)(b)(ii) of the Constitution, and second, in
Cash Paymaster’s
constitutional obligations.
[63]
Section 172(1)(b)(ii) provides that a court
may, using its just and equitable remedial powers, make an order
“suspending the
invalidity for any period and on any
conditions, to allow the competent authority to correct the defect.”
So this Court,
under constitutional warrant, may suspend the
declaration of invalidity of the contract until any new payment
process is operational.
During the period of suspension the
contract remains operational and Cash Paymaster stays bound to its
contractual and constitutional
obligations. The continued
operation of these contractual obligations thus finds its source in
this Court’s powers
under section 172(1)(b)(ii). The
Court’s sanction will give any possible future breach by Cash
Paymaster of these obligations
a dimension beyond mere breach of
contract.
[64]
In
addition, the argument ignores the public accountability aspect that
accompanies the conclusion of procurement contracts for
the
performance of public functions.
[44]
Cash Paymaster undertook constitutional obligations by entering into
the social grant payment contract with SASSA.
During the
existence of the contract these obligations stem from the contract it
concluded. But even after the dissolution
of the contract, but
before the appointment of another service provider, Cash Paymaster
will have constitutional obligations.
[65]
In
Juma Musjid
Nkabinde J explained that private
persons may also have the obligation to respect socio-economic
rights:
“
This
Court, in
Ex
Parte
Chairperson of the Constitutional Assembly: In re Certification of
the Constitution of the Republic of South Africa
,
made it clear that socio-economic rights . . . may be negatively
protected from improper invasion. Breach of this obligation
occurs directly when there is a failure to respect the right, or
indirectly, when there is a failure to prevent the direct
infringement
of the right by another or a failure to respect the
existing protection of the right by taking measures that diminish
that protection.
It needs to be stressed however, that the
purpose of section 8(2) of the Constitution is not to obstruct
private autonomy or to
impose on a private party the duties of the
state in protecting the Bill of Rights. It is rather to require
private parties
not to interfere with or diminish the enjoyment of a
right. Its application also depends on the ‘intensity of
the constitutional
right in question, coupled with the potential
invasion of that right which could be occasioned by persons other
than the state
or organs of state’.”
[45]
(Footnotes omitted.)
[66]
Where
an entity has performed a constitutional function for a significant
period already, as Cash Paymaster has here, considerations
of
obstructing private autonomy by imposing the duties of the state to
protect constitutional rights on private parties, do not
feature
prominently, if at all. The conclusion of a contract with
constitutional obligations, and its operation for some
time before
its dissolution – because of constitutional invalidity –
means that grant beneficiaries would have become
increasingly
dependent on Cash Paymaster fulfilling its constitutional
obligations. For this reason, Cash Paymaster cannot
simply walk
away: it has the constitutional obligation to ensure that a workable
payment system remains in place until a new one
is operational.
[46]
[67]
It
is true that any invalidation of the existing contract as a result of
the invalid tender should not result in any loss to Cash
Paymaster.
The converse, however, is also true. It has no right to benefit
from an unlawful contract.
[47]
And any benefit that it may derive should not be beyond public
scrutiny. So the solution to this potential difficulty
is
relatively simple and lies in Cash Paymaster’s hands. It
can provide the financial information to show when the
break-even
point arrived, or will arrive, and at which point it started making a
profit in terms of the unlawful contract.
As noted earlier, the
disclosure of this information does not require disclosure of
information relating to Cash Paymaster’s
other private
commercial interests. But its assumption of public power and
functions in the execution of the contract means
that, in respect of
its gains and losses under that contract, Cash Paymaster ought to be
publicly accountable.
Accountability
concerns
[68]
It is apparent from the merits judgment
that the Bid Evaluation Committee and Bid Adjudication Committee were
not always sure of
the requirements set out in Bidders Notice 2.
They cannot necessarily be blamed for that, but their
involvement in the
first bid may make it difficult for them to bring
an independent assessment to bear on a new tender process. That
is sufficient
reason, based on existing principles, for new members
to be appointed to those committees, under independent supervision.
[69]
It is not entirely clear to what extent
confidential information of beneficiaries gathered in the payment
process is protected,
and to what extent the information gathered may
create the potential for future commercial gain for Cash Paymaster or
any other
successful tenderer. This must be addressed in the
requirements for a new tender.
[70]
Unless the tender is awarded to a different
contractor, Cash Paymaster will benefit from an unlawful contract.
In that event
the public is entitled to know the extent to
which it has so benefited.
[71]
Apart
from these aspects, further disciplined accountability is needed in
the initiation and execution of the new tender process.
This
needs to be monitored.
This
Court has wide remedial powers to ensure effective relief for a
breach of a constitutional right. In light of the importance
of
the right to social security and the impact on and potential
prejudice to a large number of beneficiaries, the
public
clearly has an interest in ensuring that the tender is re-run
properly. In these circumstances, it
is
appropriate to impose a structural interdict requiring SASSA to
report back to the Court at each of the crucial stages of the
new
tender process
.
[48]
Further
relief
[72]
It
was suggested that AllPay is entitled to compensation in some form
under section 8(1)(c)(ii)(bb) of PAJA in these proceedings.
Compensation under this provision of PAJA is not a private-law
remedy. But AllPay’s interest in the correction
of the
administrative wrong is at this stage co-extensive with the public
interest. What AllPay lost was a chance to compete
in a lawful
and fair tender process. Similarly, in
Millennium
Waste
the Supreme Court of Appeal held that “[t]he loss to the
appellant from the unfair act was no more than the loss of the
opportunity to have its tender considered.”
[49]
Redress will be adequately met by the order we make. To
the extent that Allpay is entitled to further relief it can
pursue
that in separate proceedings.
SASSA’s
conduct
[73]
Before concluding, it is necessary to say
something about SASSA’s conduct. SASSA is an organ of
state. It is bound
to the basic values and principles governing
public administration set out in section 195 of the Constitution. As
is evident
from this judgment, and the merits judgment, SASSA’s
irregular conduct has been the sole cause for the declaration of
invalidity
and for the setting aside of the contract between it and
Cash Paymaster.
[74]
This Court sought further submissions from
the parties to assist in the difficult task of determining
appropriate relief. The
importance of this is obvious, not only
because of the vast sums of money involved but more importantly,
because of the enormous
consequences of irregularities where the
interests of beneficiaries, particularly children, play a pivotal
role in assessing the
appropriate remedy.
[75]
Yet,
contrary to the obligations it carries under section 195, SASSA has
adopted an unhelpful and almost obstructionist stance.
It
failed to furnish crucial information to AllPay regarding the
implementation of the tender
[50]
and to Corruption Watch in respect of steps it took to
investigate irregularities in the bid and decision-making
processes.
[51]
Its
conduct must be deprecated, particularly in view of the important
role it plays as guardian of the right to social security
and as
controller of beneficiaries’ access to social assistance.
[52]
Costs
[76]
SASSA
and Cash Paymaster contended that we mistakenly failed to make a
costs order in their favour in relation to AllPay’s
failed
application to lead further evidence in the merits application.
[53]
They are correct. It is a minor matter, but it must be rectified.
[77]
As far as the costs of the proceedings
relating to the just and equitable remedy are concerned, all the
parties were asked to place
information before us in order to provide
the proper context for the determination of the appropriate remedy.
There are no
real winners or losers in the ordinary litigation
sense. If there is to be any winner, one hopes it will be the
general public
who will gain from adherence to the rule of law and
greater transparency and accountability in relation to the payment of
social
grants. It is just to make no order as to costs. Each
party will bear its own costs.
Order
[78]
The following order is made:
1.
The Contract for the Payment of Social Grants between the South
African Social Security Agency (SASSA) and Cash Paymaster Services
(Pty) Ltd (Cash Paymaster) dated 3 February 2012 is declared invalid.
2.
This declaration is suspended pending the decision of SASSA to award
a new tender after completion of the tender process ordered
in
paragraph 3 below.
3.
SASSA must initiate a new tender process for the payment of social
grants within 30 days of this order:
3.1
The request for proposals for the new tender must, in addition to any
other requirements that SASSA is entitled to prescribe,
contain
adequate safeguards to ensure that―
(a) if any
re-registration process is required, no loss of lawful existing
social grants occurs;
(b) the payment of
lawful existing grants is not interrupted; and
(c) personal data
obtained in the payment process remains private and may not be used
in any manner for any purpose other than payment
of the grants or any
other purpose sanctioned by the Minister in terms of
section 20(3)
and (4) of the
Social Assistance Act 13 of 2004
.
3.2
The new tender must be for a period of five years.
3.3
A new and independent Bid Evaluation Committee and Bid Adjudication
Committee must be appointed to evaluate and adjudicate the
new tender
process. Their evaluation and adjudication must be made public by
filing with the Registrar of this Court a status report
on the first
Monday of every quarter of the year until completion of the process.
4.
If the tender is not awarded, the declaration of invalidity of the
contract in paragraph 1 above will be further suspended until
completion of the five-year period for which the contract was
initially awarded:
4.1
Within 14 days of the decision not to award the tender SASSA must
lodge a report with the Registrar of this Court setting out
all the
relevant information on whether and when it will be ready to assume
the duty to pay grants itself.
4.2
Within 60 days of the completion of the five-year period for which
the contract was initially awarded, Cash Paymaster must file
with
this Court an audited statement of the expenses incurred, the income
received and the net profit earned under the completed
contract.
4.3
SASSA must within 60 days thereafter obtain an independent audited
verification of the details provided by Cash Paymaster under
paragraph 4.2 and file the audited verification with this Court.
5.
The applicants must pay SASSA and Cash Paymaster’s costs in
relation to the application, brought in the main application
on the
merits, to lead further evidence.
6.
There is no further costs order.
For
the Applicants:
Advocate
G Marcus SC, Advocate D Unterhalter SC, Advocate M du Plessis,
Advocate C Steinberg and Advocate A Coutsoudis instructed
by Nortons
Inc.
For
the First and Second Respondents:
Advocate
S Cilliers SC and Advocate M Mostert
instructed
by the State Attorney.
For
the Third Respondent:
Advocate
T Beckerling SC, Advocate R Strydom SC, Advocate N Ferreira and
Advocate J Bleazard i
nstructed by Smit Sewgoolam
Inc.
For
the First Amicus Curiae:
Advocate
S Budlender, Advocate M Townsend and Advocate L Kelly instructed by
Van Hulsteyns Attorneys.
For
the Second Amicus Curiae:
Advocate
T Ngcukaitobi and Advocate M Bishop instructed by the Legal Resources
Centre.
[1]
AllPay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others
[2013] ZACC 42; 2014 (1) SA 604 (CC).
[2]
The
full order reads:
“
1.
Leave to appeal is granted.
2.
The appeal succeeds and the order of the Supreme Court of Appeal is
set aside.
3.
It is declared that the award of the tender to Cash Paymaster (the
third respondent) to provide services for payment of social
grants
over a period of five years for all nine provinces is
constitutionally invalid.
4.
The declaration of invalidity is suspended pending determination of
a just and equitable remedy.
5.
The parties and the amici curiae are directed to furnish factual
information on affidavit, as well as further written submissions,
on
the following aspects:
5.1
The time and steps necessary, and the costs likely to be incurred,
in the initiation and completion of a new tender process
for a
national social grant payment system.
5.2
The time and steps necessary, and the costs likely to be incurred,
in the implementation of a new system after the tender
process is
completed.
5.3
The just and equitable arrangements that should be made for the
continued operation of the payment of social grants until
a new
system is implemented.
5.4
Cost implications for:
5.4.1
the third respondent if a new tender process is ordered and
implemented, and how these costs could be ameliorated or offset;
and
5.4.2
the state if a new tender process is ordered and implemented, and
how these costs could be ameliorated.
5.5
What would be in the public interest when determining a just and
equitable remedy.
5.6
Data and statistics on the implementation of the tender to date.
5.7
Whether the third respondent is under a public duty or is
constitutionally or otherwise obliged to assist in the transitional
arrangements.
5.8
Whether there is any other remedy available to the applicant to
protect or enforce its private interests in the event that
a new
tender process is not ordered.
5.9
Any other information considered relevant.
6.
The parties and the amici must comply with the directions in
paragraph 5 above by not later than Thursday, 30 January 2014.
7.
The matter is set down for further hearing on Tuesday, 11 February
2014.
8.
The grant of a just and equitable remedy is reserved pending the
further hearing on Tuesday, 11 February 2014.
9.
The first, second and third respondents are ordered to pay the
applicants’ costs, including the costs of three counsel,
in
the High Court, the Supreme Court of Appeal and in this Court.”
[3]
Merits
judgment above n 1 at para 72.
[4]
Id
at para 91.
[5]
Id
at para 86.
[6]
Rule
31
of the Rules of the Constitutional Court.
[7]
AllPay
requested data and statistics from SASSA in relation to the
implementation of the tender. None of the information
was
provided.
[8]
As
a result of Cash Paymaster’s refusal and SASSA’s failure
to provide AllPay (or even its legal team subject to confidentiality
undertakings) with access to various documentation including
relevant financial information, AllPay commissioned a financial
expert to produce a report based on the publicly available documents
(including Cash Paymaster’s financial model which
formed part
of its response to the Request for Proposals, public announcements
by Cash Paymaster’s holding company NET1,
as well as
statements in affidavits filed in this litigation). He
concluded that the contract between SASSA and Cash Paymaster
does
not appear to represent “value for money” for either
SASSA or the South African public.
[9]
Treasury
Regulations GN R556
Government
Gazette
21249 promulgated on 31 May 2000 as amended by GN R225
Government
Gazette
27388 promulgated on 15 March 2005. The authority to conclude
such a contract is in Regulation 16A6.4.
[10]
SASSA
also noted that a previous attempt had been made at the same process
in 2006, which had cost some R16 million.
[11]
SASSA
submitted that if a new tender were awarded it would run for little
more than one year before it took over.
[12]
9
of 2004.
[13]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
[2006] ZACC 16
;
2007 (3) SA 121
(CC);
2007 (3) BCLR 300
(CC)
(
Steenkamp
)
at para 29.
[14]
National
Credit Regulator v Opperman and Others
[2012] ZACC 29
;
2013 (2) SA 1
(CC);
2013 (2) BCLR 170
(CC)
(
Opperman
)
at para 101. See Van der Merwe et al
Contract
General Principles
4
ed (Juta & Co, Cape Town 2012) at 176-7.
[15]
Opperman
id
at para 15. See Visser
Unjustified
Enrichment
(Juta & Co, Cape Town 2008) at 4 and 442 where he describes the
basic function of the law of unjustified enrichment as “to
restore economic benefits to the plaintiff, at whose expense they
were obtained, and for the retention of which by the defendant
there
is no legal justification.” See further Du Plessis
The
South African Law of Unjustified Enrichment
(Juta
& Co, Cape Town 2012) at 113.
[16]
Bengwenyama
Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and
Others
[2010] ZACC 26
;
2011 (4) SA 113
(CC);
2011 (3) BCLR 229
(CC)
(
Bengwenyama
)
at
para 85.
[17]
Merits
judgment above n 1 at para 56.
[18]
Bengwenyama
above n 16 at para 85.
[19]
Section
28(2) of the Constitution provides:
“
A
child’s best interests are of paramount importance in every
matter concerning the child.”
[20]
See
Mvumvu
and Others v Minister for Transport and Another
[2011] ZACC 1
;
2011 (2) SA 473
(CC);
2011 (5) BCLR 488
(CC) at paras
46 and 48 and
Fose
v Minister of Safety and Security
[1997] ZACC 6
;
1997 (3) SA 786
(CC);
1997 (7) BCLR 851
(CC) at para
69.
[21]
As
well as the other rights enumerated in section 27(1).
[22]
13
of 2004.
[23]
Section
3.
[24]
Sections
14-23.
[25]
Section
4(1)(a) of the Agency Act.
[26]
Section
3(a) and (b).
[27]
Section
4(2)(a).
[28]
Section
4(3).
[29]
Joseph
and Others v City of Johannesburg and Others
[2009] ZACC 30
;
2010 (4) SA 55
(CC);
2010 (3) BCLR 212
(CC) (
Joseph
)
at paras 25 and 34.
[30]
Section
7(2) of the Constitution.
[31]
Section
1(d).
[32]
Section
195(2)(b).
[33]
Section
195(1)(f).
[34]
Section
195(1)(g).
[35]
Mittalsteel
South Africa Ltd (formerly Iscor Ltd) v Hlatshwayo
[2006] ZASCA 93
;
2007
(1) SA 66
(SCA) (
Mittalsteel
)
at para 22.
[36]
AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council and Another
[2006] ZACC 9
;
2007 (1) SA 343
(CC);
2006 (11) BCLR 1255
(CC) (
AAA
Investments
).
[37]
The
minority judgments of Langa CJ and O’Regan J did not differ on
this point. See paras 68 and 119-20 of their respective
judgments.
[38]
AAA
Investments
above n 36 at paras 40-1.
[39]
See
Mittalsteel
above
n 35 at paras 8-22. See further, on the nature of public
power,
Joseph
above
n 29 at paras 43-7;
Chirwa
v Transnet Ltd and Others
[2007] ZACC 23
;
2008 (4) SA 367
(CC);
2008 (3) BCLR 251
(CC) at para
138; and
Grey’s
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) at paras 26-8.
[40]
Paragraph
(a) of the definition of “organ of state” in section 239
of the Constitution.
[41]
See
AAA
Investments
above
n 36 at para 40 where it was held that “government cannot be
released from its human rights and rule of law obligations
simply
because it employs the strategy of delegating its functions to
another entity.”
[42]
1
of 1999. See also section 10 of the Agency Act.
[43]
Section
11 of the Agency Act.
[44]
See
AAA
Investments
above
n 36 at para 89. Langa CJ aptly states that “accountability
is a central value of our Constitution.”
[45]
Governing
Body of the Juma Musjid Primary School and Others v Essay NO and
Others (Centre for Child Law and Another as Amici Curiae)
[2011] ZACC 13
;
2011 (8) BCLR 761
(CC) (
Juma
Musjid
)
at para 58.
[46]
Compare
Liebenberg “The Application of Socio-Economic Rights to
Private Law”
(2008) 3
TSAR
464
at 467 9 and Pieterse “Indirect Horizontal
Application of the Right to Have Access to Health Care Services”
(2007) 23
SAJHR
157
at 162-3.
[47]
The
dissolution of a contract creates reciprocal obligations seeking to
ensure that neither contracting party unduly benefits
from what has
already been performed under a contract that no longer exists.
This is evidenced in cases of rescission or
cancellation of a
contract where a party claiming restitution must usually tender the
return of what she received during the
contract’s existence
or, if return is not possible, explain the reasons for
impossibility. See
Extel
Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd
[1998]
ZASCA 67
;
1999 (2) SA 719
(SCA) at 731D-732D and Van der Merwe et al
above n 14 at 116-8. It also underlies the enrichment claim
available to a party
in the case of an invalid or illegal contract
where the other party seeks to retain benefits from a contract that
no longer has
legal justification. See Visser above n 15 at
442. These diverse applications of restitutionary principles
are not
rigid or inflexible. See
Jajbhay
v Cassim
1939
AD 537
at 588 and, in particular, at 544 where the Court held that
“public policy should properly take into account the doing of
simple justice between man and man.” See further
BK
Tooling
(Edms)
Bpk v Scope Precision Engineering (Edms) Bpk
1979 (1) SA 391
(A)
at 420A-C, 421A and 427.
[48]
See
Minister
of Health and Others v Treatment Action Campaign and Others (No 2)
[2002]
ZACC 15
;
2002 (5) SA 721
(CC);
2002 (10) BCLR 1033
(CC) at para
113.
[49]
Millennium
Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo
Province and Others
[2007] ZASCA 165
;
2008 (2) SA 481
(SCA) (
Millennium
Waste
)
at para 25.
[50]
See
above n 7 and n 8.
[51]
See
[23].
[52]
See
[48] and
Van
der Merwe and Another v Taylor NO and Others
[2007] ZACC 16
;
2008 (1) SA 1
(CC);
2007 (11) BCLR 1167
(CC) at
paras 71-2.
[53]
Merits
judgment above n 1 at para 98.