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[2015] ZACC 7
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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 (CCT 48/13) [2015] ZACC 7; 2015 (6) BCLR 653 (CC) (24 March 2015)
Links to summary
Heads of arguments
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
SOUTH
AFRICAN RESERVE
BANK
...............................................................
Nineteenth
Respondent
PAYMENT
ASSOCIATION OF SOUTH
AFRICA
............................................
Twentieth
Respondent
and
CORRUPTION
WATCH
..........................................................................................
First
Amicus Curiae
CENTRE
FOR CHILD
LAW
...............................................................................
Second
Amicus Curiae
BLACK
SASH
TRUST
............................................................................................
Third
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
[2015]
ZACC 7
Coram:
Mogoeng CJ, Cameron J, Froneman J, Jappie AJ,
Khampepe J, Madlanga J, Molemela AJ, Nkabinde J and Tshiqi AJ
Judgments:
The Court
Heard
on:
19 March 2015
Decided
on:
24 March 2015
Summary:
Review application in light of previous
Court order — agreed order issued by the Court — judgment
reserved on contested
paragraph — Court retains supervisory
jurisdiction — paragraph added to order to provide that further
relief may only
be sought in this Court — interests of the
beneficiaries will be central to the exercise of the Court’s
jurisdictional
discretion
ORDER
1.
CPS has only the following five remaining objections to the draft
amended RFP (Annexure DDSA1 at page 620ff of the Record):
1.1
Beneficiaries;
1.2
Biometrics;
1.3
Three free withdrawals;
1.4
Functional evaluation criteria; and
1.5
Home deliveries.
2.
SASSA shall effect its proposed amendments to the RFP to address the
issues in paragraphs 1.1-1.5 by 2 April 2015.
3.
To the extent that CPS still has any remaining objections to the
draft RFP as amended by SASSA in terms of paragraph 2:
3.1
CPS shall notify the parties and the Court by 16 April 2015;
3.2
The Court will issue directions for an urgent hearing to resolve
CPS’s notified issues.
4.
Save in the event of any objections made in terms of paragraph 3:
4.1
SASSA shall circulate the RFP to all the parties, the Court and the
prospective bidders by 17 April 2015.
4.2
All bids must be submitted by 17 May 2015; and
4.3
SASSA shall award the new tender by 15 October 2015.
5.
The parties may only approach this Court for further relief.
JUDGMENT
THE
COURT
[1]
This
judgment deals with a very narrow issue,
[1]
but it needs an explanation on how it came about that only this issue
needs to be decided.
[2]
The
matter stems from two earlier judgments of this Court.
[2]
In
AllPay
1
,
this Court set aside a tender for the provision of social grants to
approximately 15 million beneficiaries.
In
the subsequent judgment on the remedy (
AllPay
2
),
the Court declared invalid the contract between the South African
Social Security Agency (SASSA) and Cash Paymaster Services
(Pty) Ltd
(CPS) for the payment of social grants and ordered that the tender
process be re-run. The declaration of invalidity
of the
contract was suspended to allow SASSA an opportunity to re-run the
tender process and take a decision on whether to award
a new tender.
[3]
To
ensure effective monitoring, accountability and impartiality the
Court imposed a structural order requiring SASSA to report back
to it
at various stages of the new tender process and mandated that new
members of the Bid Evaluation and Bid Adjudication Committees
be
appointed.
[3]
[4]
On
5 November 2014 the third respondent in the original application
(
AllPay 1
),
CPS, lodged a “
Notice
of Request by CPS for Ancillary Relief to Structural Interdict
”.
This
was done on the basis that the matter was still “in progress”
due to the supervisory order granted in
AllPay
2
.
In the alternative, CPS sought direct access to this Court for
the same relief.
[5]
In its application, CPS sought an order
declaring that the Request for Proposals (RFP) issued by SASSA in
response to
AllPay 2
(contested
RFP), does not comply with the previous judgments and orders of this
Court in
AllPay 1
and
AllPay 2
,
and is thus invalid. CPS sought to have the contested RFP set
aside. It asked this Court to require SASSA to publish
a
revised RFP that complies with this Court’s previous order in
AllPay 2
.
[6]
We then issued the following directions:
“
1.
The first and second respondents must:
a)
By no later than Monday 8 December 2014 issue a bidder’s notice
extending the deadline for the submission of bids to 27
February
2015;
b)
Finalise its proposed amendments to the [contested] Request for
Proposals (RFP) by 15 December 2014 and file a copy of the draft
amended RFP with this Court by 20 December 2014;
c)
Circulate the draft amended RFP to all litigating parties and all the
other bidders by 20 December 2014. The draft amended RFP
must
highlight all the changes made in response to this application and to
the questions posed by those bidders who sought to obtain
clarity
through the written question and answer procedure contained in the
[contested] RFP;
d)
Issue a bidder’s notice calling upon all bidders who have
objections or questions to the draft amended RFP, to furnish
that to
the second respondent by 15 January 2015.
2.
The litigating parties may, if they so choose, file further short
affidavits in the application itself by 20 January 2015.”
[7]
After
this was done the Court
directed
SASSA to confirm by Tuesday, 10 February 2015, that it did not
wish to make further amendments to the draft amended RFP;
alternatively, if it did, to file a revised version of the draft
amended RFP by Friday, 13 February 2015. SASSA filed a
request
for an extension
for the submission of the proposed amendments to
the draft amended RFP. It sought an extension of the deadline
for submitting
a revised version of the RFP to 15 May 2015, and an
extension of the deadline for the submission of bids to 15 June 2015.
[8]
The matter was then set down for hearing on
Thursday, 19 March 2015, with directions that the parties file short
written submissions
by Friday, 6 March 2015, on the following two
issues:
(1)
whether an extension to allow for the further amendment of the draft
amended RFP, arising from any legislative change to the
legal
regulatory framework existing when the remedial order granted by this
Court in
AllPay 2
was made, is competent; and
(2)
if not, the parties’ final submissions on the validity of the
draft amended RFP.
[9]
The Black Sash Trust subsequently sought
and was granted leave to act as a friend of the court (
amicus
curiae
). It sought to introduce
evidence to the effect that the current service provider, CPS, is
subjecting beneficiaries to unlawful
deductions from their grants.
It contended that the central concern is that there is a need for
swift action to ensure that
the new tender is awarded and implemented
as soon as possible.
[10]
At the hearing on 19 March 2015 the parties
sought, and were granted, time to attempt to come to an agreement on
the further conduct
of the matter, and handed up a draft order in the
following terms:
“
IT
IS ORDERED THAT:
1.
CPS has only the following five remaining objections to the draft
amended RFP (Annexure DDSA1 at page 620ff of the Record):
1.1
Beneficiaries;
1.2
Biometrics;
1.3
Three free withdrawals;
1.4
Functional evaluation criteria; and
1.5
Home deliveries.
2.
SASSA shall effect its proposed amendments to the RFP to address the
issues in paragraphs 1.1-1.5 by 2 April 2015.
3.
To the extent that CPS still has any remaining objections to the
draft RFP as amended by SASSA in terms of paragraph 2:
3.1
CPS shall notify the parties and the Court by 16 April 2015;
3.2
The Court will issue directions for an urgent hearing to resolve
CPS’s notified issues.
4.
Save in the event of any objections made in terms of paragraph 3:
4.1
SASSA shall circulate the RFP to all the parties, the Court and the
prospective bidders by 17 April 2015.
4.2
All bids must be submitted by 17 May 2015; and
4.3
SASSA shall award the new tender by 15 October 2015.
5.
Directing that parties may only approach this Court for further
relief if it is necessary to protect the interests of beneficiaries.”
[11]
We were informed from the bar that all the
parties agreed to paragraphs 1 to 4 of the draft order, but that only
CPS objected to
paragraph 5. After hearing argument, an order
was made in terms of paragraphs 1 to 4 and judgment was reserved on
whether
paragraph 5 should also form part of the order. That is
the narrow issue referred to at the outset of this judgment.
[12]
The argument in favour of the inclusion of
paragraph 5 was grounded in the need for finalisation of the tender
process in the interests
of beneficiaries. The concern noted,
in varying degrees, in the papers by all parties (except CPS itself)
was that any delay
in finalisation benefitted CPS both financially in
relation to the period still to run under the invalid tender and in
the allocation
of a new tender.
[13]
That is a legitimate concern, but it is
addressed by a number of factors.
[14]
The first is that the finalisation of the
tender process is assured by the order agreed to by all in paragraphs
1 to 4. Paragraph
3 limits the circumstances under which CPS
may pursue remaining objections. It must be remembered that CPS
brought its application
as one either for ancillary relief to the
Court’s structural order in
AllPay
2
, or for direct access. If CPS
does not pursue any further objections, the purpose of its
application has been achieved and
can be pursued no further, except
perhaps for the question of costs. If it does pursue further
objections, the remaining
merits of its application will be finally
determined in an expedited hearing. Either way, the
finalisation of the process,
culminating in the award of the tender
by 15 October 2015, will not be significantly delayed.
[15]
If
concerns about the alleged unlawful deductions from beneficiaries’
accounts and the continued benefits that CPS is alleged
to reap from
the continuation of the invalid tender are to be introduced in these
proceedings, it will have an adverse effect on
the finalisation of
the process. It should not be forgotten that our judgment in
AllPay
2
clearly stated that, despite the suspension of the declaration of
invalidity of the contract, CPS (1) has the constitutional obligation
to ensure that a workable payment system remains in place until a new
one is operational;
[4]
(2) has
no right to benefit from an unlawful contract;
[5]
and (3) was ordered to account for its benefits under the invalid
contact.
[6]
These aspects
may, if necessary, be pursued in the future.
[16]
CPS brought the application to this Court
on the basis that it was entitled to do so as ancillary relief to our
supervisory order.
The assumption that this Court retains
supervisory jurisdiction to the exclusion of other courts until
completion of the
process is correct. To the extent that it is
necessary to make this clear, an additional paragraph 5 should be
added to the
order already issued, but not on the terms suggested in
the draft order.
[17]
The request to make it explicit that
parties may approach only this Court for further relief if it is
necessary to protect the interests
of beneficiaries cannot be
granted. It is difficult, if not impossible, to imagine on what
basis (other than those agreed
to in paragraph 3 of the order already
granted) any of the parties could approach this Court for further
relief. But if that
highly unlikely possibility materialises,
the interests of beneficiaries will surely be at the heart of
deciding whether it is
in the interests of justice to entertain the
application, not as a preliminary bar to access to this Court, but in
exercising the
jurisdictional discretion that belongs to this Court.
[18]
The following paragraph is thus added to
this Court’s earlier order:
“
5.
The parties may only approach this Court for further relief.”
[19]
For the sake of clarity and convenience,
the complete composite order is set out below.
Order
1.
CPS has only the following five remaining objections to the draft
amended RFP (Annexure DDSA1 at page 620ff of the Record):
1.1
Beneficiaries;
1.2
Biometrics;
1.3
Three free withdrawals;
1.4
Functional evaluation criteria; and
1.5
Home deliveries.
2.
SASSA shall effect its proposed amendments to the RFP to address the
issues in paragraphs 1.1-1.5 by 2 April 2015.
3.
To the extent that CPS still has any remaining objections to the
draft RFP as amended by SASSA in terms of paragraph 2:
3.1
CPS shall notify the parties and the Court by 16 April 2015;
3.2
The Court will issue directions for an urgent hearing to resolve
CPS’s notified issues.
4.
Save in the event of any objections made in terms of paragraph 3:
4.1
SASSA shall circulate the RFP to all the parties, the Court and the
prospective bidders by 17 April 2015.
4.2
All bids must be submitted by 17 May 2015; and
4.3
SASSA shall award the new tender by 15 October 2015.
5.
The parties may only approach this Court for further relief.
For
the Applicants:
G
Marcus SC, D Unterhalter SC, M Du Plessis, C Steinberg and
A Coutsoudis instructed by Nortons Incorported.
For
the First and Second Respondents:
N
Cassim SC, M Mostert and M Mathaphuna instructed by the State
Attorney.
For
the Third Respondent:
J
J Gauntlett SC, D Fisher SC, F B Pelser and J Bleazard
instructed by Smit Sewgoolam Incorporated.
For
the Third Amicus Curiae:
G
Budlender SC and M Bishop instructed by the Legal Resources Centre.
[1]
See
[11].
[2]
AllPay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer, South African Social Security Agency,
and Others
[2013]
ZACC 42
;
2014 (1) SA 604
(CC);
2014 (1) BCLR 1
(CC) (
AllPay
1
)
and
AllPay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer, South African Social Security Agency and
Others
[2014] ZACC 12
;
2014 (4) SA 179
(CC);
2014 (6) BCLR 641
(CC) (
AllPay
2
).
[3]
The
order at para 3.3 reads:
“
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]
AllPay
2
above n 2 at para 66:
“
Where
an entity has performed a constitutional function for a significant
period already, as [CPS] 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 [CPS] fulfilling its constitutional obligations.
For this reason, [CPS] 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.”
(Footnote omitted.)
[5]
Id
at para 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 [CPS].
The converse, however, is also true. It has no right to
benefit from an unlawful contract. 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
[CPS’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 [CPS’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, [CPS]
ought to be publicly accountable.” (Footnote omitted.)
[6]
Id
at paras 4.2 and 4.3 of the order (at para 78) which read:
“
4.2
Within 60 days of the completion of the five-year period for which
the contract
was initially awarded, [CPS] 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 [CPS] under paragraph 4.2
and file the audited verification with this Court.”