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[2016] ZACC 39
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Department of Transport and Others v Tasima (Pty) Limited (CCT5/16) [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2) SA 622 (CC) (9 November 2016)
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Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
5/16
In the matter
between:
DEPARTMENT OF
TRANSPORT
First
Applicant
DIRECTOR-GENERAL:
DEPARTMENT OF
TRANSPORT
Second
Applicant
MINISTER OF
TRANSPORT
Third
Applicant
WERNER EDUARD
KOEKEMOER
Fourth
Applicant
ROAD TRAFFIC
MANAGEMENT
CORPORATION
Fifth
Applicant
COLLINS
LETSOALO
Sixth
Applicant
KEVIN JOSHUA
KARA-VALA
Seventh
Applicant
MORNE
GERBER
Eighth
Applicant
GILBERTO
MARTINS
Ninth
Applicant
CHRIS
HLABISA
Tenth
Applicant
MAKHOSINI
MSIBI
Eleventh
Applicant
and
TASIMA (PTY)
LIMITED
Respondent
Neutral citation:
Department of Transport and Others v Tasima (Pty) Limited
[2016]
ZACC 39
Coram:
Mogoeng CJ, Bosielo AJ, Froneman J, Jafta J, Khampepe J, Madlanga J,
Mhlantla J, Nkabinde J and Zondo J.
Judgments:
The Court: [1]
Jafta J (minority):
[2] to [132]
Khampepe J
(majority): [133] to [208]
Zondo J (concurring
in the minority): [209] to [223]
Froneman J
(concurring in the majority): [224] to [232]
Heard on:
24
May 2016
Decided on:
9
November 2016
Summary:
unlawful
administrative act — reactive challenge — organ of state
— maladministration
validity of
government contract — contempt of court — rule of law —
delay
ORDER
On appeal from the
Supreme Court of Appeal (hearing an appeal from the High Court of
South Africa, Gauteng Division, Pretoria)
The following order
is made:
1. The application to lead new evidence is refused.
2. Leave to appeal is granted.
3. The appeal is upheld insofar as the counter application succeeds.
4. The order of the Supreme Court of Appeal is set aside and replaced
with the following:
“i.
Within 30 days of this order, Tasima is to hand over the services and
the electronic National Traffic Information System
to the Road
Traffic Management Corporation.
ii.
Unless an alternative transfer management plan is agreed to by the
parties within 10 days of this order, the hand over
is to be
conducted in terms of the Migration Plan set out in schedule 18 of
the Turnkey Agreement.”
5. The finding of contempt in part 1 of the order made by the Supreme
Court of Appeal is upheld for the period before the counter
application succeeded, but lapses thereafter.
6. Each party is to pay its own costs.
JUDGMENT
THE COURT:
[1]
When the judgment in
Merafong
[1]
was handed down, the minority judgment contained a finding that
related to this matter (
Tasima
).
[2]
That finding appears in the first judgment below. This arose
due to an agreement between the Justices of this Court
that the
judgments in
Merafong
and
Tasima
would be handed down
together on 24 October 2016. As a result of that
understanding, the scribe in the minority
judgment in
Merafong
,
who is also the scribe in the first judgment in
Tasima
,
included a passage that reflected an example of facts similar to
those in
Tasima
in the minority judgment in
Merafong
.
Two or three days before the envisaged hand-down date, some
paragraphs in the first judgment in
Tasima
were deleted at the
request of one of the Justices, who pointed out that they were no
longer necessary for the narrow finding made
in that judgment
following the revision process. Regrettably, when the decision
to proceed with the delivery of the judgment
in
Merafong
was
taken, the cross reference to
Tasima
in that matter was
overlooked.
JAFTA J (Mogoeng CJ,
Bosielo AJ and Zondo J concurring):
Introduction
[2]
This matter concerns constitutional issues of considerable
importance. These include the scope of judicial authority
exercised
by courts. In particular whether a court may decline
to decide a counter-application for the review of administrative
action
where there is a court order directing that the administrative
action be implemented.
[3]
These issues arise in the context of a decision by the
erstwhile Director-General of the Department of Transport
(Department) in
terms of which a fixed term agreement for provision
of services by Tasima (Pty) Limited (Tasima) was extended for five
years allegedly
in breach of section 217 of the Constitution
[3]
and section 38 of the Public Finance Management Act (PFMA).
[4]
Tasima sought and obtained orders from the High Court of South
Africa, Gauteng Division, Pretoria (High Court), which
enforced
that decision. In some of those orders, officials in the
Department were held to be in contempt of court for their
failure to
carry out the enforcement order.
[4]
A direct consequence of this was that a contract that had
expired due to effluxion of time was kept alive by court orders.
These court orders extended the operation of the contract even beyond
the extension purportedly made by the Director General.
As
a result a contract that carried the price of R355 million ended up
costing the Department more than double that amount.
Parties
[5]
The applicants are the Department, its current
Director-General, the Minister of Transport, the Road Traffic
Management Corporation
(Corporation) and seven officials of the
Department. They cite Tasima as the respondent in this
application for leave to
appeal against the order of the Supreme
Court of Appeal. That Court has overturned an order that was
granted by the High
Court in favour of the applicants.
Facts
[6]
In July 2001 the Department awarded a tender for the provision
of services in relation to the electronic National Traffic
Information
System (eNaTIS). This system linked up the
Department with all licensing institutions in the Republic,
manufacturers of vehicles
and various institutions, including banks
and the South African Police Service. The system enables the
Department to regulate
and administer the licensing of all vehicles
in this country, learner drivers and drivers’ licenses, vehicle
roadworthiness
tests as well as the general implementation of the
road traffic legislation.
[7]
Following the award of the tender, the Department and Tasima
concluded a turnkey agreement in terms of which Tasima operated the
eNaTIS on behalf of the Department, for a fee of R355 million over a
period of five years (Turnkey Agreement). Although the
agreement was signed on 3 December 2001, it came into force on 1 June
2002. It was for a fixed period of five years, terminating
on
31 May 2007.
[8]
The parties agreed that upon termination, Tasima would
transfer the operation of the eNaTIS to the Department. The
agreement
stipulated procedures to be followed in effecting the
contemplated transfer. The first step to this end was a written
request from
the Department for a transfer management meeting between
it and Tasima. This request was to be made within 90 days from
the
date of termination. At that meeting the parties were to
agree on a transfer management plan which had to be completed within
30 days from the date of the request for the meeting.
[9]
As usual in complex agreements of this nature, the parties
anticipated that disputes would arise during the currency of the
agreement.
They provided a mechanism for resolving disputes
arising from the implementation of the agreement. Disputes of
this kind
were to be submitted to arbitration by an arbitrator
appointed in terms of the agreement. It is apparent that the
arbitration
envisaged was aimed at resolving disputes relating to
enforcing terms of the agreement. A dispute on whether the
agreement,
having run its course of five years, was validly kept
alive did not fall within the arbitrator’s competence.
This is
because the agreement would have terminated and the clause
from which the arbitrator derived her power would have fallen away.
[10]
Happily for the parties, no dispute arose during the currency
of the agreement until it terminated on 31 May 2007. But on the
eve of termination Tasima addressed a letter to the erstwhile
Director-General, requesting that the agreement be extended for
another five years. The request was rejected by Ms Mpumi Mpofu,
the Director General who advised that in accordance with
the
terms of the agreement, the Department would take over the operation
of the eNaTIS. Tasima was informed that a notice
would be sent
to it on 1 June 2007 which would suggest a date for the transfer
management meeting. It was also pointed out
that the Department
would ask that the parties draw up a transfer management plan within
30 days. In response, Tasima said
it would await the
Department’s notice but in the interim it would continue
providing services under the agreement until
the transfer management
plan was implemented.
[11]
Indeed on 31 May 2007, the agreement came to an end by
effluxion of time. However notice for the meeting was not given
on
1 June 2007 and as a result no meeting was held and no plan was
drafted. Instead and in order to avoid a serious dislocation
and disruption in the administration of the eNaTIS, the parties
agreed that Tasima would continue providing the services it rendered
under the expired contract, on a month-to-month basis.
Presumably the aim was that this interim arrangement would run until
transfer was effected.
[12]
But that was not to be. The month-to-month arrangement
continued until April 2010. Meanwhile the employment
contract
of the Director-General also came to an end in October 2009
and a new Director-General, Mr George Mahlalela, was appointed
with
effect from February 2010. About a month later, Tasima
renewed its request for the extension of the expired agreement.
[13]
The request was submitted to Mr Zakhele Thwala, the Deputy
Director General, for consideration and recommendation. He
was the official who had been handling the matter and who dealt with
Tasima. He was privy to the fact that a concern was
raised by
Tasima regarding the uncertainty brought about by the interim
arrangement, which resulted in skilled employees leaving
Tasima’s
employ, owing to insecurity of their jobs.
[14]
In one of the letters addressed to Tasima by the Deputy
Director-General, he pointed out that an efficient and properly
maintained
eNaTIS was vital to the Department’s operations.
Although the Minister had already approved a phased transfer of the
eNaTIS to the Corporation, he assured Tasima that its provision of
the services would still continue. This communication
took
place in May 2009.
[15]
Returning to Tasima’s request, on 15 April 2010 the
Deputy Director-General consulted the Corporation’s CEO, Mr
Collins
Letsoalo, about the request. This triggered a flurry of
correspondence between the two of them. The CEO responded by
pointing out that the interim arrangement was bad and had attracted
criticism from Parliament’s Portfolio Committee on Finance
which advised that the matter be put to tender. He also pointed
out that Tasima’s charges were too high and that the
Department
could not afford them. He suggested that tender bids be invited
so that the interim arrangement could be terminated.
[16]
In his response the Deputy Director-General stated:
“I will take into account your view, and would also like to
bring the following to your attention: We cannot advertise a
contract
which is running. The Company Tasima has recently bought shares
from Aivia.kom at cost. Attracting and retaining
staff is
essential for the service guarantee. A new contractor will only
maintain the current system, why advertise.
In the best
interest of eNaTIS and [the] new shareholders to re-new the current
contract is my view and as for SCOPA,
[5]
I will take responsibility.”
[17]
To this the CEO responded:
“I am aware that the contract is running on a month to month.
Reason is that it has expired. Change of ownership
cannot be
used as an excuse to extend a contract. As to SCOPA that is the
accounting officer’s responsibility, you
therefore cannot take
responsibility. As head of finance I have to ensure that the
procurement processes are complied with.
You are therefore
advised to refrain from taking any decision on this which would
result in irregular expenditure. I am puzzled
by your
articulation on the interests of the new shareholders in Tasima.
Frankly their interest should not worry us.
Ours should be the
interest of the [D]epartment, the system, eNaTIS and government in
general.”
[18]
Two days later the Deputy Director-General replied:
“Maybe I need to remind you that we had a discussion on this
matter. We agreed on renewal except for the duration.
I
had proposed 5 years and you said 3 years.”
[19]
With regard to the shareholders’ interest, the Deputy
Director-General said the reality which could not be wished away was
that they had made an investment and that it was fair to afford them
the opportunity to “recoup the investment”.
He
suggested that extending the contract was one of the ways to enable
them to recoup their investment.
[20]
On 14 May 2010, the Deputy Director-General prepared a
memorandum in which he recommended to the new Director-General that
the contract
be extended for five years with effect from 1 May 2010
to 30 April 2015.
[21]
In the memorandum, the Deputy Director-General motivated his
recommendation by making reference to constraints that the interim
arrangement caused on Tasima’s human resources. He also
referred to Tasima’s then recent release of two software
programs to extend the validity of learner drivers’ licenses to
24 months. He mentioned the other services which
Tasima
was planning to launch for use during the FIFA World Cup soccer
tournament that was to be held in this country in June-July
2010.
These included software on commuter portals, a Geospatial Management
System and the Find Your Way 2010 website.
[22]
These were new services that were not part of the services
covered by the month-to-month arrangement. He asserted that the
cost of the contract was anticipated to be consistent throughout its
duration. But he did not record the strong opposition
from the
CEO. Nor did he allude to the disapproval of the interim
arrangement by SCOPA and its suggestion that the matter
be put to
tender. More importantly, the memorandum was silent on reasons
why there was to be a deviation from the normal
tender system
required by section 217 of the Constitution.
Treasury Regulation 16.A6.4 read with Treasury Instruction
8 of
2007/2008 permitted a deviation from tendering only in the case of
emergency or where there is only one supplier for services
to be
procured. Even so, the regulation required reasons for the
deviation to be recorded in writing and approved by an accounting
officer.
[23]
None of these requirements was met. There was no
emergency and there were other businesses which could supply the
services
to be procured. Notwithstanding these shortcomings and
the unlawfulness of the recommended action which was not only
unconstitutional
but was also illegal as it violated section 38 of
the PFMA, the Director-General approved and purported to extend the
contract
for five years. The approval was made on 12 May 2010
with retrospective effect from 1 May 2010.
[24]
On 21 May 2010, the CEO, who was also at the level of a Deputy
Director General addressed a letter to Tasima. He advised:
“Kindly ignore [the Director-General’s letter of 12 May
2010] and refrain from using it as a basis for a contract.
The
contract does not allow for an extension that changes management.
The contract that [the Department] needs at this stage
is maintenance
and enhancement contract. The current contract is a development
and only needs enhancement. Furthermore,
you are proposing new
developments which are not part of the specifications of your
contract. You will agree that this will
be irregular and
therefore unlawful. This matter has been discussed with [the
author of the recommendation] and he is in
concurrence with the
position.”
That recommendation
had been attached to the letter of 12 May 2010, which informed Tasima
about the extension.
[25]
Tasima responded by a letter of 24 May 2010 in which it
asserted:
“We take note of your purported rescission of the decision of
the Department’s Accounting Officer, the Director-General,
Mr
George Mahlalela.
We place on record that unless and until we receive any communication
from either the Director-General, as the Accounting Officer,
or the
Minister as the Executive Authority, we are going to disregard your
letter and proceed on the basis of the DG’s letter
of 12 May
2010.
To the best of our knowledge and understanding the contract has been
extended for five (5) years and we will continue to plan,
operate and
roll out on those bases.”
[26]
Evidently this response does not deal with the new and
additional services which were not part of the month-to-month
arrangement,
nor does it offer any justification for procurement of
these services without following the necessary tender process.
[27]
It appears that the purportedly extended agreement was
implemented. For the provision of the additional services to
the Department,
the Director-General appointed a close corporation
called Mandate Strategy Roadmap and Delivery CC (MSRD). In June
2010 MSRD
demanded payment of the sum of R29 771 566.
But the Department failed to pay and subsequently MSRD sold its
software
to Tasima for R12 million. Tasima in turn
invoiced and claimed payment of that amount plus VAT from the
Department.
An amount of R13 680 000 was paid to
Tasima even though the sale of the software to Tasima was not part of
the eNaTIS
contract.
[28]
The Auditor-General queried the extension of the contract to
Tasima and declared that it was irregular as it was done without
following
procurement requirements such as tendering. This
prompted the Department to seek to terminate the agreement. The
Director-General
briefed officials in the Department about the
Auditor-General’s report. This briefing occurred in 2011.
[29]
In 2012 the Director-General initiated negotiations with
Tasima relating to termination of the extension and transfer of the
eNaTIS
to the Department. He informed Tasima that the
Auditor-General had declared the extension irregular. At the
beginning
Tasima was willing to negotiate the termination and
transfer of the system to the Department. But suddenly Tasima
stopped
attending the negotiations. The Department addressed an
email to Tasima, stating that, since the negotiations had broken
down, Tasima should hand over the eNaTIS to it. Around June
2012 the Department stopped all payments relating to the eNaTIS.
Tasima turned to the High Court to enforce the purportedly
extended contract. Unwittingly the High Court, as it appears
below, aided and abetted Tasima in its quest to enforce the
agreement.
Litigation
background
[30]
Tasima instituted an urgent application in the High Court,
seeking an interim order directing the Department to effect payment
and
perform all its obligations under the agreement, pending the
finalisation of arbitration proceedings to be instituted by Tasima.
On 7 August 2012 the matter came before Teffo J who granted the
interim order sought. It is not clear from the papers whether
the Department had then been afforded the opportunity to file
opposing papers before the order was granted.
[31]
What is clear though is the fact that the Department filed an
affidavit deposed to by the same Director-General who had purported
to extend the contract. He contended that the decision to
extend was invalid for failure to follow procurement processes.
At the hearing in this Court we were informed that the decision was
impugned on the ground that it was not in compliance with section
217
of the Constitution, section 38 of the PFMA and the Treasury
Regulations.
[32]
On the return day Tasima persisted before Mabuse J in seeking
an order declaring that the agreement concluded by the parties on 3
December 2001 was extended to end on 30 April 2015 and that the
Department be ordered to perform its obligations under that agreement
pending the finalisation of the dispute resolution proceedings to be
instituted in terms of clause 24 of schedule 13 of the agreement.
Those were the arbitration proceedings which were to be instituted
within 25 days from the date of judgment.
[33]
Without determining the defence raised by the Department
pertaining to the invalidity of the decision to extend which was
shown
to be inconsistent with section 217 of the Constitution
and section 38 of the PFMA. Mabuse J focussed on whether Tasima
had met the requirements of an interim relief which would operate
until the dispute between the parties was finally determined
in the
arbitration proceedings.
[6]
[34]
The learned Judge proceeded from the premise that for Tasima
to succeed it had to show that requirements for a temporary remedy
had been established. These, he said, were a clear or prima
facie right; a well-grounded fear of irreparable harm if the interim
relief was not granted; the balance of convenience and the absence of
another satisfactory remedy.
[35]
Applying this test to the present case Mabuse J held:
“It is common cause that on 3 December 2001 the parties entered
into an agreement that was to endure for a period of five
(5) years.
It had been agreed by the parties that, by effluxion of time,
the agreement would terminate on 31 May 2007, unless
its operation
was extended under specific circumstances. It is common cause
furthermore that that agreement was extended,
from 1 June 2007 to 8
April 2010 on a month to month basis. It is also common cause
that between 1 June 2007 and May 2010
the applicant and [the
Department of Transport (DOT)] continued performance of the terms of
the original agreement. The applicant
contends that on 12 May
2010 the parties’ agreement was extended for a fixed period of
5 years which will terminate in 2015.
The extension of the
agreement by the said period created rights for the applicant and
obligations for the DOT. That
situation has accordingly
created, rightly or wrongly, prima facie rights for the applicant.
The applicant contends that the services it renders in accordance
with the agreement with DOT are its only source of income and
that
the business of managing e-Natis is its core business. Accordingly
any attempt by the respondents to deny the existence
of the agreement
or terminate it will doubtlessly cause irreparable harm to the
applicant. According to the applicant any
termination of the
agreement which is contrary to the terms of the parties’
agreement will have severe ripples on the employment
of its staff and
will also result in the applicant having to terminate its obligations
to third parties. The email that Mr
Jock sent to the applicant
on 16 July 2012 in which he threatened not to make any further
payments following his position that
the agreement had terminated on
31 May 2012 constituted the requisite threat prejudicial to the
applicant’s rights.
In the honest belief that the contract exists and is valid, the
applicant has no choice but to take appropriate measures to protect
the rights that it derives from the agreement. The measures the
applicant adopted are designed to keep it afloat until the
principle
dispute is determined by another forum.”
[7]
[36]
However, having concluded that Tasima had “made out a
good case for interim relief”, the learned Judge declined to
declare
that the agreement had been extended to 30 April 2015.
He reasoned that if he did so, he would have usurped the powers of
the arbitrator because that touched at the core of the dispute
between the parties. The primary objective of an interim order,
he continued, is to preserve the status quo pending the final
determination of the parties’ rights.
[8]
[37]
What the learned Judge overlooked was the fact that the
approach he had adopted was suitable for cases where the resolution
of the
dispute in the main proceedings depended on a determination of
facts. Where, as here, the validity of the source of the right
the applicant sought to preserve was also impugned on the basis that
it was an illegal source, a court can hardly close its eyes
to this
and proceed to grant an order preserving an illegally obtained
right. Interim relief is not designed to protect an
illegal
“right”.
[38]
Here the undisputed facts before the Court were that the
extension of the agreement was effected in violation of section 217
of
the Constitution, section 38 of the PFMA and the Treasury
Regulations. In these circumstances it is difficult to
appreciate
how the Court was convinced that Tasima had established a
right worthy of preservation, even at the level of a prima facie
right.
Nor is it clear how Tasima established that it would
suffer irreparable harm if the interim order were not granted in
circumstances
where the extension was unconstitutional and unlawful.
[39]
Moreover, the Court pointed out rightly that the purpose of an
interim order is to preserve rights pending a final determination.
Here it was apparent that the arbitrator to whom the Court deferred
the matter had no jurisdiction to determine whether the contract
was
lawfully extended because her power to arbitrate derived from the
impugned contract. Therefore, she could not arrogate
to herself
the power to arbitrate which was outside the agreement. The
question whether the extension was constitutional
or not fell outside
the arbitrator’s mandate. The constitutionality or
legality of the extension was an issue pre-eminently
within the
competence of the Court.
[40]
As a result the Court granted an order that was inconsistent
not only with the Constitution but also with the PFMA. The
order
issued was on these terms:
“1. Pending the finalisation of the dispute resolution
proceedings instituted by the applicant in terms of clause 24 and
schedule 13 of the agreement between the applicant and the first
respondent dated 3 December 2001, as subsequently amended and
extended,
the first respondent is hereby directed
:
1.1
to perform its obligations in terms of the agreement
;
l.2
without limiting the generality of l.l supra, to comply with the
payment obligations as defined in paragraph 17 of the applicant’s
founding affidavit;
1.3
to pay the costs of this application.”
[41]
A direct result of implementing this order was that an invalid
extension of the agreement was given legal force and effect.
As
it appears later in this judgment, the extension was not only
unconstitutional and unlawful but was also motivated by corruption
and fraud.
[42]
But I want to stress that on the approach followed by the High
Court, even a fraudster whose rights flow from an illegal and
fraudulent
act would be entitled to an interim order preserving those
rights until a final determination of the parties’ rights is
made.
This cannot be right.
[43]
Emboldened by the order granted, Tasima maximised its benefit
from the order. It did not hesitate to invoke the order
whenever
the Department failed to make payments. The contempt
of court procedure was the stick with which Tasima whipped the
Department’s
officials to submission. In the process a
flurry of orders were issued by various Judges of the Gauteng
Division. The
genesis of all of them was the order of Mabuse
J. In some of them, persons who were not party to the agreement
between Tasima
and the Department were joined to the proceedings and
later were even held to be in contempt of court for their failure to
perform
contractual obligations emanating from an agreement to which
they were not a party.
[44]
One of those parties is the Corporation. It was found to
have breached the order by its failure to perform the Department’s
contractual obligations in terms of a contract to which it was a
stranger. This was overlooked by the Judge who made the
order
despite the fact that Mabuse J’s order was restricted to the
Department only. And it directed the Department
to do one
thing, namely, “to perform its obligations in terms of the
agreement” that was concluded by Tasima and the
Department on
3 December 2001.
Current proceedings
[45]
Tasima instituted the present application by way of urgency in
March 2015. In it Tasima sought a host of orders, including
the
declaration that the Department’s officials and the Corporation
were guilty of contempt of court for their failure to
comply with the
various orders referred to above. It further sought that those
officials and members of the Corporation be
committed to imprisonment
for a period of 30 days. An interdict was also requested
to restrain the respondents before
the High Court from taking
any steps in preparation for the transfer of the eNaTIS to the
Department, after the expiry of
the extended agreement on 30 April
2015. An order was also sought to ensure that the eNaTIS was
not transferred until a transfer
management plan envisaged in
schedule 15 of the agreement was implemented.
[46]
Tasima’s application was triggered by an exchange of
correspondence between the Department and the Corporation, in late
February
and early March 2015. The subject of that
correspondence was an agreement between them to take over the eNaTIS
after 30 April
2015, which was the date on which the extension was to
expire. In preparation for the transfer, the Corporation
advertised
posts pertaining to operating the eNaTIS.
[47]
The High Court defined Tasima’s case in these terms:
“The contemptuous behaviour complained of by applicant was that
prior to the expiration of the agreement DoT had already
appointed
[the Corporation] to take over from 1 May 2015. [The
Corporation] had been appointed prior to the stipulated
hand over or
transfer period being implemented in terms of clause 15 –
Change control proceedings and clause 26 – Transfer
management
upon termination of the agreement. However, DoT contends that
it has a right to prepare itself in readiness for
when the agreement
expires and as such it is not in violation of any contractual rights
when it was advertising for staff and the
like to step into the
applicant’s shoes once the agreement came to an end
.
”
[9]
[48]
The matter was opposed by the Department and the Corporation.
The Department also lodged a counter-application for the review
and
setting aside of the extension. The Department contended that
the extension breached section 217 of the Constitution,
section 38 of
the PFMA and the relevant Treasury Regulations.
[49]
The grounds for impugning the extension were formulated in
these terms:
“The impugned extension was in clear contravention of
section 217(1) of the Constitution in that it was for the
contracting
of services without following a system that is fair,
equitable, transparent, competitive and cost effective. In
extending
this contract Mahlalela failed to comply with Treasury
Regulation 16.A6.4, read with Treasury Instruction Note 8 of
2007/2008 which
provide that in urgent or emergency cases or in case
of a sole supplier, other means of procurement may be followed but
that the
reasons for deviation should be recorded and approved by the
accounting officer. The proferred reasons were also lacking in
rationality. In terms of section 38(2) of the PMFA an
accounting officer may not commit a department, trading entity
or
constitutional institution to any liability for which money has not
been appropriated. When Mahlalela extended the contract
with effect
from 1 May 2010, no money had been appropriated by the Department for
the extended contract.
. . .
[A]s a result of this illegal extension the Department has received
negative reporting from the Auditor-General.
. . .
[T]he relevant portion of the Department’s annual financial
statements for the year ended 31 March 2014 . . . [shows] that
the
Department is now forced to shift money from some of its programmes
in order to fund this contract. This is a direct
result of the
failure by Mahlalela to comply with section 38(2) of the PFMA.”
[50]
In addition the Department and the Corporation raised a
collateral challenge against the extension. They invoked
Prodiba
,
[10]
a decision in which the Supreme Court of Appeal had held that another
extension granted by the same Director-General in similar
circumstances was illegal and was set aside.
[51]
The Department and the Corporation disputed that, in taking
steps to prepare for the transfer of the eNaTIS after the expiry of
the extension, they breached Mabuse J’s order and the
various other orders. They asserted that they were entitled
to
take those steps which were not directed at interfering with the
extension but were designed purely for them to be ready to
take over
the system when transfer was effected.
[52]
With regard to the Corporation, Hughes J held that since it
was not a party to the agreement between Tasima and the Department,
it should not have been joined in these proceedings. The
learned Judge concluded that as a non-party, the Corporation had
no
obligation to fulfil arising from that agreement. To the extent
that the orders required the Corporation to perform contractual
obligations, I agree that apropos the Corporation, they were not
competent orders.
[53]
Regarding the counter-application, the High Court first
considered whether it should entertain the review owing to the
delay.
The Court proceeded to exercise its discretion and
stated:
“This is in the discretion of the court and in exercising this
wide discretion I take into account the fact that the basis
of the
counter-application is a dispute raised by the applicant already, I
also consider the delay in that dispute being adjudicated,
I consider
that the collateral challenge raised is one that validates or
invalidates the relief sought in the applicants main application,
I
take into account Section 217 of the Constitution and, section
38(1)(a)(iii) of the (PFMA) and I am guided by principle enunciated
in
Truter v Degenaar
1990 (1) SA 206
(T) and the cases
mentioned therein.
.
. .
I
n my view
t
o
order the enforcements sought by the applicant
,
in the face of DoT’s counter-appl
i
cation,
the applicants referra
l
in terms of
Schedule 13 and the delay that has already taken place from
2012
together w
i
th the factors I have
referred to
,
i
t
wou
l
d be irresponsible and not in the
interests of justice if the counter appl
i
cation
which embodies exceptional circumstances is not considered
.
”
[11]
[54]
The Court went on to consider the validity of the extension.
Drawing from
Prodiba
, Hughes J held:
“From the aforesaid it is clear to me that Mahlalela did not
adhere to section 217(1) of the Constitution in that the extension
agreement was not done in a fair, transparent, equitable, and
competitive and cost effective manner. With regards to the cost
effective aspect it is illustrated by DoT that in the Mahlalela
extension period the applicant gained R2,5 billion whilst the initial
contract was for R355 million inclusive of VAT. This also went
against the grain of section 38(1)(a)(iii) of the PFMA. Clearly,
this
extension had not been budgeted for as Mpofu had confirmed that the
agreement had come to an end and had initiated the transfer
management provisions.”
[12]
[55]
The learned Judge concluded that the extension was illegal and
declared that as extended the Turnkey Agreement was void
ab initio
(from the outset) and Tasima’s application was dismissed.
Supreme Court of
Appeal
[56]
Tasima appealed to the Supreme Court of Appeal. With
regard to Tasima’s application for contempt of court and
committal
to imprisonment that Court differed with the High Court and
held that the invalidity of the extension was irrelevant to the
question
whether the Department’s officials and the Corporation
were in contempt of the court orders. In a constitutional
democracy
based on the rule of law, the Supreme Court of Appeal
stated, court orders must be complied with by private citizens and
the
State alike.
[13]
Having outlined the requirements for civil contempt, the Court held
that Tasima had established the charge of contempt against
some of
those officials, including the Corporation.
[57]
Accordingly, the Supreme Court of Appeal held that the current
Director General and Mr Chris Hlabisa, who were second and tenth
respondents before it, be committed to imprisonment for a period of
30 days but this order was suspended indefinitely on condition
that
they did not implement the steps taken in February-March 2015, to
transfer the eNaTIS from Tasima to the Corporation.
A warrant
for the committal to imprisonment was authorised but it was to be
issued only if they breached the condition of suspension.
[58]
In connection with an interdict sought by Tasima to the effect
that the respondents before it be restrained from transferring the
eNaTIS, except in terms of schedule 15 of the turnkey agreement, the
Supreme Court of Appeal held that there was no link between
this part
of the order and the Department’s challenge directed at the
validity of the “extended” contract.
The Court
reasoned that the interdict was not based on the agreement but on the
court orders granted in favour of Tasima.
The fact that those
court orders were in turn founded on the “extended”
contract, concluded the Supreme Court of Appeal,
did not detract from
this principle because Tasima did not seek to compel performance of
the contract but performance of court
orders. Hence the
illegality of the contract was irrelevant.
[14]
[59]
Consequently, the Supreme Court of Appeal interdicted the
respondents from taking steps to implement transfer of the eNaTIS
alluded
to in the letters of 24 and 25 February and 4 March
2015.
[60]
As regards the counter-application for review, the Supreme
Court of Appeal dismissed it mainly on the ground that it was
instituted
after a delay of five years in circumstances where no case
was made out for condonation. The Supreme Court of Appeal
held that the High Court did not condone the delay in terms of
section 9 of the Promotion of the Administrative Justice Act
(PAJA).
[15]
The Court also held that the Department, as an organ of state, was
not entitled to pursue the counter-application for review
as a
collateral challenge.
Issues
[61]
The issues that arise from the judgment of the Supreme Court
of Appeal are the following:
(a) Whether the applicants were in breach and in contempt of the
various orders;
(b) Whether condonation for the late review of the extension should
have been granted;
(c) Whether the applicants could raise a collateral challenge against
the extension; and
(d) Whether here the Supreme Court of Appeal has correctly relied on
Oudekraal
[16]
and
Kirland.
[17]
Leave to appeal
[62]
As mentioned this case raises important constitutional issues,
including the scope of judicial power. More specifically
whether
a court may refuse to adjudicate a review application if
there is a court order directing that the impugned decision be
implemented
pending proceedings to be instituted in terms of an
underlying agreement. The other issue is whether, in light of
the peremptory
terms of section 172(1) of the Constitution that
requires courts to declare conduct that is inconsistent with the
Constitution
to be invalid, a court may decline to condone a delay in
bringing a review where the impugned decision was clearly
unconstitutional
and was tainted by corruption.
[63]
It is in the interests of justice to grant leave to enable
this Court to consider all these issues which until now have not been
raised for determination in this Court. Furthermore, there are
prospects of success on the merits. The High Court and
the
Supreme Court of Appeal have reached conflicting outcomes.
[64]
The orders issued by the High Court before the launch of the
present proceedings and the order granted by the Supreme Court of
Appeal,
here have enforced and continue to enforce a fixed term
contract of five years, more than nine years from the date on which
it
expired by effluxion of time. The continued operation of
that contract costs the Department R50 million per month. And
Tasima has to date earned more than R2.5 billion from a contract
whose original price was R355 million. As the amount in
excess
of the original price was not budgeted for, the Department is forced
to divert funds from approved projects to finance an
allegedly
unconstitutional and illegal agreement.
New evidence
[65]
After the hearing in the Supreme Court of Appeal and whilst
the judgment was pending, the Department attempted to file new
evidence.
This evidence related to events that occurred after
the pleadings were closed and a judgment had been given by the High
Court.
The evidence pertains to steps taken to pursue criminal
charges against certain individuals who were associated with the
extension
of the Turnkey Agreement. The Supreme Court of Appeal
did not admit this evidence into record.
[66]
Hence the request for it to be admitted by this Court.
Tasima opposes the request. A request of this kind is regulated
by rule 31 of the Rules of this Court.
[18]
In terms of the rule a party is entitled to place before this Court
evidence dealing with facts which do not appear on the
record
provided such facts are common cause or are incontrovertible or are
of an official, scientific, technical or statistical
nature and
capable of easy verification. The new facts which the
Department seeks to introduce fall outside those categories.
Accordingly the request must be declined. It is now convenient
to address the issues and I propose to begin with the main
question
which is whether the counter-application should have been entertained
in view of the delay. For if not, the fact
that the applicants
should have succeeded on the merits would be immaterial to the
outcome.
Counter-application
[67]
The Supreme Court of Appeal declined to entertain the
counter-application on a number of reasons. These included the
delay
in instituting the review and the proposition that a collateral
challenge was not available to the state. For a better
understanding
of the conclusions reached by the Supreme Court of
Appeal, it is necessary to remind ourselves of the relief sought by
the Department
in its counter application. The Department
sought an order:
“(a) Reviewing and setting aside the decision of the then
Director-General of the Department of Transport, Mr George Mahlalela,
of 12 May 2010 to approve and extend the eNaTIS project RT1194KA
Contract (“the eNaTIS contract or contract”) for a
fixed
period of five years effective from 1 May 2010;
(b) Declaring the extended contract which took effect from 1 May 2010
and expires on 30 April 2015 void
ab initio
; and
(c) Ordering [Tasima] to immediately hand over the eNaTIS system and
related services as specified in the eNaTIS contract to the
[the
Corporation].”
[68]
It is plain from this order that in (a), the Department sought
a straight review of the extension whereas (b) is aimed at rendering
the agreement unenforceable. Typically, this may be taken as a
collateral challenge. It would be recalled that in its
defence
the Corporation raised the invalidity of the agreement only.
And in (c) the Department sought an order consequent
to either (a) or
(b).
[69]
As the Supreme Court of Appeal observed, the grounds advanced
by the Department for the review were that the impugned decision was
taken in violation of section 217 of the Constitution, section 38 of
the PFMA and Treasury Regulations. This was not disputed
by
Tasima. To bolster its case, the Department also relied on
Prodiba
, a decision of the Supreme Court of Appeal in terms of
which a decision taken by the same Mr Mahlalela in breach of section
217
of the Constitution and section 38 of the PFMA was declared to be
void
ab initio
.
[70]
But the Supreme Court of Appeal distinguished the present
matter from
Prodiba
. It stated:
“In
Prodiba
a decision by the same Mr Mahlalela in his
capacity as Director-General of the Department to extend another
contract for five years,
was set aside by this court at the behest of
the Department in a counter-application. A cardinal difference
between the two
cases is, however, introduced by the substantial
delay factor in this case, which was absent in
Prodiba
. The
impugned decision in this case, as we know, was taken in May 2010.
This means that nearly five years had elapsed
before the institution
of the Department’s review application. Since the review
application had been brought under
s 6 of PAJA it is, at least
on the face of it, subject to the time-bar in s 7. In
terms of this section proceedings
for judicial review in terms of s 6
must be instituted without unreasonable delay and not later than 180
days, unless the
court in terms of s 9 allows an extension
‘where the interests of justice so requires’
.
”
[19]
[71]
It is apparent from the judgment of the Supreme Court of
Appeal here that in
Prodiba
too there was a delay that was two
years less than the present. Having noted that here there was a
five year delay, that
Court stated:
“Moreover, Mr Mahlalela’s contract as Director-General
expired on 28 February 2013. After this date there
was
therefore no impediment to the institution of review proceedings.
What is more, in
Prodiba
the Department brought a
counter application for review in circumstances substantively
similar to those of this case.
There is therefore no
explanation whatsoever for the additional two year delay since 2013
before the counter-application was brought
in March 2015.”
[20]
[72]
With regard to allegations of fraud and corruption on which
the Department relied for condonation, the Supreme Court of Appeal
ruled
that for two reasons, the Department could not rely on them.
First, the Court stated that those allegations were not put forward
as a ground for review. Second, Tasima would be severely
prejudiced if the allegations were taken into account because it
did
not respond to them.
[73]
In my respectful view, both these reasons are unconvincing.
It will be recalled that serious allegations of corruption were
made
in the Department’s answering papers to which Tasima was
afforded an opportunity to reply but out of its own choice
decided
not to respond to those allegations and confined itself to contesting
that Mr Mahlalela was to blame for the Department’s
inaction.
[21]
In one of the affidavits filed on the Department’s behalf, it
was alleged that one Mr Ncube signed a consultancy agreement
with
Tasima to be paid R2 million per month for no specific services but
on condition that the agreement of 3 December 2001 between
Tasima and
the Department was extended for more than 18 months.
[74]
Mr Mahlalela went on to extend that agreement irregularly for
a period of five years. Subsequently Mr Mahlalela concluded a
lease agreement in terms of which the same Mr Ncube let his house for
rent in the sum of R45 000 per month which amount Mr Mahlalela
could not afford from his salary and as a result he failed to pay the
rent for a period of a year without any action taken by Mr
Ncube.
[75]
The other allegation was that notwithstanding an irregular
agreement signed by Mr Mahlalela and MSRD in January 2010 for
the
procurement of services on the Geo Spatial Management System
and FindYourWay 2010 website and portal, Mr Mahlalela later
authorised payment of R13 million to Tasima for its acquisition of
the software from MSRD. The contract with MSRD was also
signed
in breach of procurement requirements, including section 217 of the
Constitution. This was done despite the fact that
the services
which were to be offered by MSRD were used as motivation for
extending Tasima’s agreement.
[76]
In the absence of an explanation from Tasima and Mr Mahlalela,
these allegations on corruption shed light on the motive for
breaching
the Constitution, the PFMA and Treasury Regulations, at the
time the extension was granted.
[77]
In refusing condonation the Supreme Court of Appeal did not
only fail to take the allegations into account but also overlooked
the
overwhelming evidence on record to the effect that Mr Mahlalela
violated section 217 of the Constitution when he extended the
agreement.
Once that was established, the Supreme Court of
Appeal was obliged by section 172(1)(a) of the Constitution to
declare the extension
to be invalid.
[22]
Under this section the declaration of invalidity is a mandatory
consequence of inconsistency with the Constitution.
Section 2
of the Constitution proclaims that the Constitution is supreme and
that law or conduct that is inconsistent with it is
invalid.
[78]
PAJA cannot be invoked as justification for a court not to
comply with section 172(1)(a) of the Constitution. This is
so because the Constitution, and not PAJA, is the supreme law from
which PAJA itself derives its validity. Therefore, here
Hughes
J in the High Court was right to entertain the counter-application,
following her consideration of section 217 of the Constitution.
[23]
[79]
The approach adopted by the Supreme Court of Appeal did not
only deviate from section 172(1)(a) but resulted also in that Court
enforcing conduct that was in violation of the Constitution. As
guardians of the Constitution, courts are under an obligation
to
uphold it. A decision that is invalid because of its
inconsistency with the Constitution can never have legal force and
effect. This is fundamental to the principle of constitutional
supremacy.
[80]
Consequently the Supreme Court of Appeal erred in holding
that:
“
According to the general
principle laid down by this court in
Oudekraal
(para 26) administrative actions must be treated as valid until set
aside, even if actually invalid.”
[24]
And again later:
“
[T]he import of section 7
of PAJA is that after the 180-day period, a court is only empowered
to entertain the review application
if the interests of justice
require an extension under section 9. Absent such extension,
the court has no authority to consider
the review application at
all. Whether or not the decision was in fact unlawful no longer
matters. The decision would,
as it were, be ‘validated’
by the delay.”
[25]
[81]
This is in conflict with the rule of law and specifically the
principle of legality. These principles require administrative
functionaries to exercise only public power conferred on them and
nothing more. No amount of delay can turn an unlawful act
into
a valid administrative action. This is because apart from the
rule of law, section 33(1) of the Constitution prescribes
that
administrative action must be lawful.
[26]
Collateral challenge
[82]
The Supreme Court of Appeal held that the defence of a
collateral challenge is not available to an organ of state. For
this
proposition, reliance was placed on that Court’s decisions
in
Kwa Sani Municipality
[27]
and
Merafong SCA
.
[28]
In
Kwa Sani Municipality
, without reference to any authority,
the Supreme Court of Appeal said:
“In the present matter, it is the municipality which is the
public authority, and not the association. The municipality
is
also not in the position of a subject being coerced by a public
authority whose underlying administrative act is invalid. No
collateral challenge is raised by way of the application. The
application concerned a public authority claiming that its
own
administrative action was invalid. This submission of the
municipality thus falls far wide of the mark.”
[29]
[83]
This conclusion was influenced primarily by the mistaken
understanding of the concept of collateral challenge. As the
Supreme
Court of Appeal remarked here, that concept “has its
origins” in
Oudekraal.
[30]
In that case the Supreme Court of Appeal adopted the principle of
collateral challenge from a decision of the House of Lords
in
Boddington
.
[31]
In this English case Lord Irvine LC stated:
“It would be a fundamental departure from the rule of law if an
individual were liable to conviction for contravention of
some rule
which itself is liable to be set aside by a court as unlawful. . . .
Any system of law under which the individual was
convicted and made
subject to a criminal penalty for breach of an unlawful bylaw would
be inconsistent with the rule of law.”
And later he said:
“However, in approaching the issue of statutory construction
the courts proceed from a strong appreciation that ours is a
country
subject to the rule of law. This means that it is well
recognized to be important for the maintenance of the rule
of law and
the preservation of liberty that individuals affected by legal
measures promulgated by executive public bodies should
have a fair
opportunity to challenge these measures and to vindicate their rights
in court proceedings.”
[32]
[84]
In the same case Lord Steyn remarked:
“My Lords, with utmost deference to eminent Judges sitting in
the Divisional Court I have to say the consequences of
Bugg
’s
case are too austere and indeed too authoritarian to be compatible
with the traditions of the common law. In
Eelugbayi; Elekou
v Officer Administering the Government of Nigeria
[1931] AC 662
at 670, a habeus corpus case, Lord Atkin observed that ‘no
member of the executive can interfere with the liberty or property
of
a British subject except on the condition that he can support the
legality of his action before a court of justice’.
There
is no reason why a defendant in a criminal trial should be in a worse
position and that seems to reflect the true spirit
of the common
law.”
[33]
[85]
It is plain from this statement that the principle of
collateral challenge which applied to civil matters was extended to
criminal
trials. It is also apparent that that principle was
informed by the rule of law as understood in the English common law.
It may well be that in English law an organ of state cannot, unlike
in our law, sue another organ of state. And that an organ
of
state may not, unlike in our system, seek a review of its own
decision in a court of law. So care must be exercised in
relying on English decisions for the proposition that a collateral
challenge is not available to organs of state.
[86]
In the view I take of the matter it is not necessary to
express a final opinion on this issue. Suffice it to say that
in ours,
the rule of law as a founding value of our democratic state,
does not serve the purpose of preserving individual rights only.
It also prohibits the exercise of power that is not validly
conferred. In those circumstances I can see nothing in logic
or
principle that justifies denying an organ of state the right to
challenge the validity of administrative action when it is faced
with
coercive action based on a constitutionally invalid act.
Therefore, to the extent that
Kwa Sani Municipality
and
Merafong SCA
suggest otherwise, I doubt that they reflect the
correct position in our law. The purpose of a collateral
challenge is to
prevent an illegal compulsion to do something.
Indeed, it would be jurisprudentially intolerable for a court to
enforce an
illegal act solely on the ground that the party against
which enforcement is sought is the state which may not raise a
collateral
challenge.
Oudekraal
[87]
The Supreme Court of Appeal’s reliance on
Oudekraal
here was mistaken. Nowhere does
Oudekraal
say that an
administrative action performed in violation of the Constitution
should be treated as valid until set aside. Much
worse, that
its unlawfulness does not matter as long as it is not set aside and
that a delay in challenging it validates the action
concerned.
As mentioned, this proposition turns the supremacy of the
Constitution principle on its head.
[88]
On the contrary
Oudekraal
lays down a narrower
principle that applies in specific circumstances only. That
principle draws its force from the distinction
between what exists in
law and what exists in fact.
[34]
An invalid administrative act that does not exist in law cannot
itself have legal force and effect. Yet the act may
still exist
in fact, for example an administrative act performed without legal
power. It exists in fact until set aside on
review.
However, since the act does not exist in law, it can have no binding
effect.
[89]
This much is clear from
Oudekraal
. There Howie P
and Nugent JA said:
“In our view the apparent anomaly – which has been
described as giving rise to ‘terminological and conceptual
problems of excruciating complexity’ – is
convincingly explained in a recent illuminating analysis of the
problem
by Christopher Forsyth. Central to that analysis is the
distinction between what exists in law and what exists in fact.
Forsyth
points out that while a void administrative act is not
an act in law, it is, and remains, an act in fact, and its mere
factual
existence may provide the foundation for the legal validity
of later decisions or acts. In other words
‘...an
invalid administrative act may, notwithstanding its non-existence [in
law], serve as the basis for another perfectly
valid decision. Its
factual existence, rather than its invalidity, is the cause of the
subsequent act, but that act is valid
since the legal existence of
the first act is not a precondition for the second.’
It follows that ‘[t]here is no need to have any recourse to a
concept of voidability or a presumption of effectiveness to
explain
what has happened [when legal effect is given to an invalid act].
The distinction between fact and law is enough.’
The author concludes
as follows:
‘[I]t has been argued that unlawful administrative acts are
void in law. But they clearly exist in fact and they often
appear to be valid; and those unaware of their invalidity may take
decisions and act on the assumption that these acts are valid.
When
this happens the validity of these later acts depends upon the legal
powers of the second actor. The crucial issue
to be determined
is whether that second actor has legal power to act validly
notwithstanding the invalidity of the first act.
And it is
determined by an analysis of the law against the background of the
familiar proposition that an unlawful act is void’.”
[35]
[90]
But what emerges from the above analysis of Forsyth is the
fact that an administrative act that is invalid in law may still have
legal consequences in exceptional circumstances. The phrase
“legal consequences” here does not suggest that the
invalid act is suddenly enforceable. Far from it. The
legal consequence referred to is that of providing a pre-decision
condition. If the performance of a second administrative act
required by the empowering provision depends on the mere factual
existence of the first administrative act, the mere existence of the
first act would lead to a valid second act. The second
act
cannot be impugned solely on the basis that the first act, although
it existed in fact, was legally invalid.
[91]
However, if the empowering provision requires that the first
act be legally valid, its mere existence in fact will not validate
the second act if the first act was invalid in law. In that
case the second act may be challenged on the basis that the first
act
was legally invalid. Thus in
Oudekraal
it was stated:
“But just as some consequences might not be dependent for
validity upon the mere factual existence of the contested
administrative
act so there might be consequences that will depend
for their legal force upon the substantive validity of the act in
question.”
[36]
[92]
Pivotal to the enquiry aimed at determining whether an invalid
administrative act has legal consequences in the context contemplated
in
Oudekraal
, is the language of the empowering provision.
[93]
The ratio of
Oudekraal
is contained in the following
statement:
“Thus the proper enquiry in each case – at least at first
– is not whether the initial act was valid but rather
whether
its substantive validity was a necessary precondition for the
validity of consequent acts. If the validity of consequent
acts
is dependent on no more than the factual existence of the initial act
then the consequent act will have legal effect for so
long as the
initial act is not set aside by a competent court.”
[37]
Kirland
[94]
The Supreme Court of Appeal relied also on
Kirland
for
holding that organs of state are excluded from reliance on a
collateral challenge.
[38]
Paragraphs 82-3 of
Kirland
were invoked and the following
statement was quoted:
“PAJA requires that the government respondents should have
applied to set aside the approval, by way of formal
counter-application.
They must do the same even if PAJA does
not apply. To demand this of government is not to stymie it by
forcing upon
it a senseless formality. It is to insist on due
process, from which there is no reason to exempt government. On
the
contrary, there is a higher duty on the state to respect the law,
to fulfil procedural requirements and to tread respectfully when
dealing with rights. Government is not an indigent or
bewildered litigant, adrift on a sea of litigious uncertainty, to
whom the courts must extend a procedure circumventing lifeline.
It is the Constitution’s primary agent. It
must do
right, and it must do it properly. Counsel for the department
told this court, as he told the Supreme Court of Appeal,
that, if the
department had to bring a counter-application under PAJA, it would
face the PAJA 180-day rule. Well, precisely.
An
explanation for the delay is a strong reason for requiring a
counter-application.”
[39]
[95]
But the quoted statement did not deal with a collateral
challenge at all. In context
Kirland
addresses the
question whether public officials should ignore administrative action
if they believe it to be invalid. Cameron
J was at pains to
point out that “the government respondents should have applied
to set aside the approval, by way of formal
counter-application”.
They were required to do so, he said, whether PAJA applied or not.
[96]
That is exactly what the Department did in this matter.
It instituted a counter application in accordance with what was
stated in
Kirland.
In these circumstances the Supreme
Court of Appeal should have entertained the Department’s
counter-application.
Validity of the
extension
[97]
Now that we have paved the way it is convenient to address the
validity of the Director-General’s decision to extend the
agreement
without putting the matter out to tender. The
Department advanced three grounds for impugning it. First, it
was contended
that the decision was in breach of section 217 of the
Constitution. Second, it was submitted that he violated section
38
of the PFMA as he committed the Department to financial liability
for which no funds had been appropriated. Thirdly, it was
asserted that the deviation from the tender process was done in
non-compliance with the Treasury Regulation 16.A6.4 read with the
Treasury Instruction Note 8 of 2007/2008.
[98]
The facts show that when Mr Mahlalela extended the contract,
there were no funds appropriated for it. As a result money had
to be shifted from other projects to finance the extended contract.
This led to an investigation by the Auditor-General which
culminated
in a report that declared the extension to have been irregular.
It was only then that Mr Mahlalela changed his
view on the extension
and sought to have it cancelled. However, Tasima would have
none of it after a few meetings between
the parties. Tasima
adopted this stance despite the fact that it was clear that Mr
Mahlalela had violated section 38 of the
PFMA. In law conduct
or a decision taken in contravention of a statutory prohibition is
invalid.
[40]
[99]
The general principle is that the state procures goods and
services through a tender process. Regulation 16.A6.4 read with
the treasury instruction note defines an exception to this principle
in certain specified circumstances. In a case of an
emergency
or where there is only one supplier who can provide goods or
services, the regulation permits a deviation from inviting
competitive bids in terms of a fair, transparent and cost-effective
tendering process.
[41]
[100]
The reasons which the regulation requires to be recorded and
approved by the accounting officer must show why it was impossible to
ask for competitive bids. Here the reasons advanced did not
relate to any impracticality. On the contrary these reasons
served the purpose of promoting Tasima’s interests at the
expense of the Department and the taxpayers who footed the hefty
bill
from May 2010 to date.
[101]
Dealing with a contract extended by the same Mr Mahlalela, the
Supreme Court of Appeal stated in
Prodiba
:
“By not embarking on a competitive bid process, particularly
given the nature and scale of the services to be provided, including
the cost implications, Mr Mahlalela erred fundamentally. By
concluding the agreement without the approval of his employer
and
political principal and/or of the Cabinet, he acted without
authority. By concluding the agreement and incurring a
liability
for which there had been no appropriation, he not only
erred, but acted against mandatory statutory prescripts and against
the
constitutional principles of transparent and accountable
governance. For all these reasons the agreement is liable to be
declared void
ab initio
. Consequently the appeal
must be upheld
.
”
[42]
[102]
Finally, in extending the contract Mr Mahlalela violated the
provisions of section 217 of the Constitution, our supreme law.
This section obliges every organ of state, regardless of the sphere
under which it falls, to procure goods or services “in
accordance with a system which is fair, equitable, transparent,
competitive and cost effective”. Evidently, the
purpose of section 217(1) is to eliminate fraud and corruption in a
public tender process and to secure goods and services at the
best
price in the market.
[43]
[103]
The deleterious impact that corruption has on our society and
its democratic institutions was aptly described by this Court in
Glenister
.
[44]
In their joint judgment Moseneke DCJ and Cameron J stated:
“There can be no gainsaying that corruption threatens to fell
at the knees virtually everything we hold dear and precious
in our
hard-won constitutional order. It blatantly undermines the
democratic ethos, the institutions of democracy, the rule
of law and
the foundational values of our nascent constitutional project. It
fuels maladministration and public fraudulence
and imperils the
capacity of the state to fulfil its obligations to respect, protect,
promote and fulfil all the rights enshrined
in the Bill of Rights.
When corruption and organised crime flourish, sustainable
development and economic growth are stunted.
And in turn, the
stability and security of society is put at risk.”
[45]
[104]
Yet earlier in
Heath
,
[46]
this Court cautioned against the threat posed by corruption to our
democracy. There Chaskalson P said:
“Corruption and maladministration are inconsistent with the
rule of law and the fundamental values of our Constitution. They
undermine the constitutional commitment to human dignity, the
achievement of equality and the advancement of human rights and
freedoms. They are the antithesis of the open, accountable,
democratic government required by the Constitution. If allowed
to go unchecked and unpunished they will pose a serious threat to our
democratic state. There can be no quarrel with the
purpose
sought to be achieved by the Act, or the importance of that purpose.
That purpose must, however, be pursued in accordance
with the
provisions of the Constitution.”
[47]
[105]
What makes corruption to have a devastating impact on our
society is the fact that, as a developing country with limited
resources;
we have not so long ago emerged from the dark past of
apartheid which caused enormous inequalities. It has fallen
upon the
democratic government to address those imbalances in order
to transform ours from being one of the most unequal societies in the
world into “a society based on democratic values, social
justice and fundamental rights” contemplated in our
Constitution.
[106]
In the sad case of
Soobramoney
,
[48]
this Court painted a sobering reality in relation to conditions under
which the majority of people in our country live. It
was
stated:
“We live in a society in which there are great disparities in
wealth. Millions of people are living in deplorable conditions
and in great poverty. There is a high level of unemployment,
inadequate social security, and many do not have access to clean
water or to adequate health services. These conditions already
existed when the Constitution was adopted and a commitment
to address
them, and to transform our society into one in which there will be
human dignity, freedom and equality, lies at the
heart of our new
constitutional order. For as long as these conditions continue
to exist that aspiration will have a hollow
ring.”
[49]
[107]
There can be no doubt that the financial demands on the
government are high. And yet the resources it has at its
disposal
are limited. To this day many of our country-women and
-men still live under the conditions described by this Court in 1997
in
Soobramoney
. To them the aspirations and dreams
contained in our Constitution such as improving “the quality of
life of all citizens
and free the potential of each person”
remain to be just that – dreams and aspirations – 22
years after the attainment
of democracy in our land.
[108]
It is scarce public resources that section 217 seeks to
protect from corruption. The facts of this case show that once
those
charged with the responsibility to procure goods or services on
behalf of the state start to operate outside the ambit of the
section,
corruption thrives. For example here Tasima agreed to
pay Brand Partners CC R2 million per month if the relevant
contract was extended for a period of more than 18 months.
Having concluded an irregular agreement with MSRD, the Department
under Mr Mahlalela paid Tasima R13 million for the purchase of
software by Tasima from that close corporation.
[109]
The unlawful extension of the contract with Tasima by Mr
Mahlalela continues to have a huge impact on the Department’s
reserves,
long after Mr Mahlalela had left the Department. It
currently costs the Department about R50 million per month to
maintain
the contract.
[110]
The violation of the Constitution, the PFMA and the
Treasury Regulations, individually and collectively, rendered
the extension
in question invalid from the outset.
Contempt Proceedings
[111]
The Supreme Court of Appeal concluded and declared that the
Department of Transport and its Director-General were in contempt of
the order of Mabuse J granted on 17 October 2012 and the subsequent
orders of 26 March 2013; 27 August 2013 and 21 January 2014.
That Court also declared that the Corporation and Mr Makhosini
Msibi were in contempt of the order of 27 August 2013 and that
Mr Chris Hlabisa was in contempt of the orders of 17
October 2012; 26 March 2014 and 27 August 2013.
[112]
In support of the contempt charge Tasima relied on the letters
and emails exchanged between the Department and the Corporation which
indicated that preparations were undertaken to implement transfer of
the eNaTIS to the Corporation upon termination of the extended
contract on 30 April 2015. To this end the Corporation had
advertised vacancies in newspapers with the aim of enabling it
to
take over the eNaTIS. 170 of Tasima’s employees had
applied. The question that arises is whether these facts
support a finding that any of the relevant court orders were
deliberately or wilfully disobeyed.
[113]
The determination of the question requires us to consider each
order and compare its terms to these facts. The first order
is
that of 17 October 2012 granted by Mabuse J.
[50]
Notably this order was designed to regulate the parties contractual
relations pending the finalisation of proceedings which
were
instituted to resolve the dispute on whether the contract had been
validly extended. The order required the Department
to perform
its obligations under the agreement pending the determination of the
dispute. But those proceedings were never
finalised until the
extension terminated on 30 April 2015. The steps that Tasima
complained about were taken in preparation
of what would happen once
the extension had run its course.
[114]
The contract as extended was going to terminate by effluxion
of time on 30 April 2015. The Department and the
Corporation
had to prepare themselves for the transfer of the eNaTIS
from Tasima upon the termination of the contact. What they did
could
not constitute a breach of Mabuse J’s order that required
the Department to perform its obligations under the agreement because
as on 1 May 2015 that agreement would have terminated.
[115]
When this was drawn to the attention of the Supreme Court of
Appeal, that Court merely stated that the transfer provisions of
schedule
15 continued to exist. The fundamental error in this
reasoning is that Mabuse J’s order defined the parties’
rights and obligations pending the decision on the validity of the
agreement. That order was predicated on a contract that
continued to exist and was preserved in the interim whilst its
validity was under consideration. That order was not designed
to govern the parties’ obligations after termination of the
contract. When the Supreme Court of Appeal heard the appeal
on
23 November 2015, the extended contract had long terminated.
[116]
But even if Mabuse J’s order was to be construed as
regulating what should happen after termination, the conduct
complained
of on the part of the Department and the Corporation did
not breach any of the provisions of schedule 15. Bearing in
mind
that the Department was ordered to continue performing its
obligations under the impugned agreement, it is difficult to
appreciate
how the preparatory steps taken by the Department and the
Corporation could be in breach of schedule 15.
[117]
In its terms this schedule required Tasima and the Department
to meet within 30 days from the date of the Department’s
written
request for a transfer management plan meeting, which should
have been made within 90 days from the date of termination.
Once the parties have met and agreed a transfer management plan, the
schedule obliged Tasima to implement the plan and the Department
to
pay costs of implementation. What is clear is that the schedule
required the parties to reach an agreement on the transfer
of the
eNaTIS. The steps undertaken by the Department and the
Corporation and on the basis of which they were convicted of
contempt, did not impact on the parties’ ability to reach an
agreement on a transfer management plan. On the contrary,
those
steps were taken to facilitate implementation of such a plan as and
when made. Accordingly, the Supreme Court of Appeal
erred in
holding that the conduct relied on by Tasima established contempt.
There is nothing in schedule 15 which proscribes
the steps taken by
the Department and the Corporation. These steps did not and
could not effect the actual transfer.
Nor did they constitute a
plan to transfer.
[118]
It will be recalled that all that was done by the Department
and the Corporation was to agree that upon termination of the
extended
agreement, the Corporation will accept transfer of the
eNaTIS from Tasima. In order to get ready for this obligation,
the
Corporation advertised posts in newspapers and a number of
candidates, including Tasima’s employees, applied. These
steps did not breach schedule 15 at all. Instead, the order
issued here for the transfer of the eNaTIS from Tasima to the
Corporation gives effect to this very agreement.
[119]
Furthermore, a perusal of subsequent orders which were all
based on Mabuse J’s order plainly show that none of them
regulated
the parties conduct after termination of the agreement.
Each of the orders of 26 March 2013; 27 August 2013; 5 November 2013;
and 21 January 2014 required performance of specified acts which
should have been performed during the currency of the agreement.
Not one of those orders prohibited the Corporation and the Department
from taking steps to be ready for the transfer of the eNaTIS
from
Tasima.
[120]
Therefore, there are no facts on record showing that by taking
preparatory steps at the beginning of 2015, the Department and the
Corporation were in contempt of the various orders. There is
simply no factual basis for concluding that the conduct complained
of
established a breach of any of those orders.
[121]
I have read the judgment of Zondo J and I agree with it and
more particularly that
Economic Freedom Fighters
[51]
does not support the proposition that an unconstitutional or unlawful
administrative action is binding until set aside in review.
The
approach adopted by the second judgment draws no distinction between
a valid and an invalid administrative action. It
disregards the
fact that the valid action exists both in law and in fact.
Whereas the invalid one does not exist in law but
in fact. On
that approach both the valid and invalid action are binding and must
be complied with until the invalid action
is set aside. This is
extraordinary.
[122]
I have also read the concurring judgment of Froneman J
(fourth judgment). I agree with him that judicial
precedent
obliges this Court to follow its previous decisions and
that it may depart from them if convinced that they were clearly
wrong.
But as Zondo J observes in the third judgment, adherence
to precedent must not be inconsistent or selective.
[123]
When in
Kirland
the majority pronounced: “having
failed to counter-apply during these proceedings, the Department must
bring a review application
to challenge the approval granted to
Kirland, which remains valid until set aside”,
[52]
it departed from many decisions of this Court in cases like
Affordable Medicines Trust
,
[53]
New Clicks
[54]
and
Pharmaceutical Manufacturers
.
[55]
These decisions and many others confirmed that administrative action
that is inconsistent with the Constitution is invalid.
Kirland
contradicted all of this by holding that conduct inconsistent
with the Constitution is valid until set aside. This was done
without pronouncing that the previous decisions were clearly wrong.
[124]
One administrative action is not capable of being invalid and
valid at the same time. The notion of an invalid action
remaining
valid until set aside is flawed. Invalidity and
validity in this context are mutually exclusive. If an invalid
action
were to be valid until set aside, every performance in
compliance with it would be lawful. And once set aside, the
invalid
action would cease to exist at the level of fact. But
its revocation by a court on review would not affect what had already
been done in accordance with the invalid action because it would have
been valid until the moment of setting it aside.
[125]
In support of its novel conclusion,
Kirland
did not
cite a single decision of this Court as authority. Instead,
reliance was placed on
Oudekraal,
a decision of a lower
court. Decisions of the highest court cannot be overruled or
contradicted on authority of a lower court.
In
Oudekraal,
the Supreme Court of Appeal too did not cite decisions of this
Court throughout its judgment but relied solely on the views
expressed
by an academic commentator on English law and an English
case.
[56]
[126]
Following
Kirland
means that the established body of
authority from this Court to the effect that illegal and irrational
administrative decisions
are invalid is no longer good law. As
is the principle that the invalidity of such conduct flow from the
Constitution itself
and that courts merely confirm invalidity by a
declaration.
[127]
Moreover, a statement in a judgment which does not form part
of a ratio is not binding. Even the lower courts are free to
depart from it. As the second judgment rightly observes here:
“The majority judgment in
Kirland
held that the Court
should not decide the validity of the decision because the government
respondents should have applied to set
aside the approval, by way of
formal counter-application.”
[57]
To put this beyond doubt, the majority in
Kirland
said:
“The Supreme Court of Appeal stated that the approval was, on
Dr Diliza’s own evidence, tendered by the Department,
‘invalid’. This was incautious. The approval
was not before the Court. But the Court itself said
so.
It pointed out that the validity of the approval ‘is not the
subject of challenge in these proceedings’.
So it is
wrong to take its statement as a definitive finding”
[58]
[128]
It is apparent from the judgment in
Kirland
that the
majority eschewed adjudicating whether the administrative action was
invalid. The majority held that this was not
raised for
decision in that matter because the respondents had not applied to
have the administrative action in question set aside.
Therefore, the statement that it remained valid until set aside was
obiter.
[129]
The fourth judgment also suggests that in this judgment I
departed from the precedent set in
Khumalo
. This is not
true.
Khumalo
supports the position taken in this
judgment and the second judgment with regard to the issue of delay.
That case did not
address at all the question whether an illegal
decision remains valid until set aside. In contrast, the
majority in
Khumalo
stressed that a court should not readily
accept that a delay prevents it from determining whether public power
was lawfully exercised.
[130]
Skweyiya J said:
“In the previous section it was explained that the rule of law
is a founding value of the Constitution, and that state functionaries
are enjoined to uphold and protect it, inter alia by seeking the
redress of their departments’ unlawful decisions. Because
of these fundamental commitments, a court should be slow to allow
procedural obstacles to prevent it from looking into a challenge
to
the lawfulness of an exercise of public power. But that does
not mean that the Constitution has dispensed with the basic
procedural requirement that review proceedings are to be brought
without undue delay or with a court’s discretion to overlook
a
delay.”
[59]
[131]
For these reasons I would have declared that the extension
with effect from 1 May 2010 to April 2015 was inconsistent
with section 217 of the Constitution and section 38 of the
Public Finance Management Act and as a result the extension was
void
ab initio
. However in the exercise of remedial power on
justice and equity, I would have preserved what had already been done
in terms
of the invalid extension and order Tasima to transfer the
eNaTIS systems to the Corporation within 30 calendar days.
[132]
It follows that the appeal must succeed.
KHAMPEPE J (Froneman
J, Madlanga J, Mhlantla J and Nkabinde J concurring):
[133]
I have read the judgment of my brother Jafta J (first
judgment) and gratefully adopt his thorough exposition of the facts.
I agree that leave to appeal should be granted, and that the appeal
should succeed to the extent that the counter application for
review
of the extension of the contract should succeed. However, I
prefer to arrive at that outcome on the basis of existing
precedents
of this Court, and the application of the logic of that approach to
new circumstances.
[134]
I agree that the Department’s application to file new
evidence should be refused. As the first judgment notes, in
terms
of rule 31 of this Court’s Rules, new evidence can only
be admitted if it is common cause, incontrovertible or of an
official,
scientific, technical or statistical nature that is capable
of easy verification. The new evidence which the Department
seeks
to introduce falls outside of these categories.
[135]
What served before the Supreme Court of Appeal was an appeal
against the decision of Hughes J in the High Court. The Supreme
Court of Appeal found that the High Court had erred and reversed its
findings. That decision is now on appeal before us.
The
Department’s defence to the main application is founded on the
success of its counter application in the High Court.
The
counter application consists principally of a reactive challenge to
the 12 May 2010 extension of the contract between the Department
and
Tasima on grounds of illegality.
[60]
This challenge is composed of a delayed review
[61]
for which the Department seeks condonation, and a “classical”
collateral challenge
[62]
that the Department argues is not time-barred.
[63]
The Corporation endorsed the former, and placed no reliance on the
latter.
[136]
After finding that the Department’s reactive challenge
should succeed, the first judgment concludes that the orders of
contempt
made by the Supreme Court of Appeal were, in any case,
incorrectly granted.
[64]
This because there was “no factual basis for concluding that
the conduct complained of established a breach of any
of [the High
Court] orders”.
[65]
[137]
It therefore falls to be determined in the first place whether
the reactive challenge should be upheld. If, as the Supreme
Court of Appeal found, the applicants were not entitled to raise or
rely on a reactive challenge, then that is the end of the case.
If they were, then the merits of the reactive challenge, and the
impact of any successful challenge on the various court orders,
must
be considered. It is thus sensible to deal first with whether
the applicants, as organs of state, may raise reactive
challenges.
Are reactive
challenges open to state organs?
[138]
In his majority judgment in
Merafong
, Cameron J traces
the history of pre constitutional reactive challenges in the
common law.
[66]
From that analysis, with which I agreed and again endorse here, it
emerges that “in South African law, the permissibility
of a
reactive attack on administrative action has always been approached
with a measure of flexibility. And its availability
is not
limited to those at risk of criminal conviction.”
[67]
[139]
The majority judgment then proceeds to demonstrate that a
flexible approach to allowing reactive challenges is buttressed and
enhanced
by the Constitution.
[68]
That state functionaries are entitled to challenge exercises of
public power, including their own, was recognised by the
Supreme
Court of Appeal in
Pepcor
,
[69]
and endorsed by this Court in
Khumalo
.
[70]
There it was noted that “state functionaries are enjoined to
uphold and protect [the Constitution], and that a court
should be
slow to allow procedural obstacles to prevent it from looking into a
challenge to the lawfulness of an exercise of public
power.”
[71]
[140]
Drawing on this line of reasoning, the majority judgment in
Merafong
held that the Municipality was not disqualified from
raising a reactive challenge merely because it is an organ of
state.
[72]
The same must apply here. It is both a logical and pragmatic
consequence of the aforementioned developments in our
jurisprudence
to allow state organs to challenge the lawfulness of exercises of
public power by way of reactive challenges in appropriate
circumstances.
[73]
I therefore agree with the first judgment’s sentiment that the
Supreme Court of Appeal was incorrect to find that the
Department was
barred from bringing a reactive challenge to the extension of the
contract solely because it is a state functionary.
[74]
Can an
administrative act be ignored?
[141]
Having decided that state organs are entitled to bring
reactive challenges, the first judgment concludes that the Supreme
Court
of Appeal erred in holding that PAJA barred it from considering
the Department’s counter-application.
[75]
It does so on the basis that, “PAJA cannot be invoked as
justification for a court not to comply with section 172(1)(a)
of the Constitution.”
[76]
In doing so it takes issue with the Supreme Court of Appeal’s
finding that the delay in bringing the counter-application
was
sufficient to validate the extension of the contract. The first
judgment finds that this conclusion—
“is in conflict with the rule of law and specifically the
principle of legality. These principles require administrative
functionaries to exercise only public power conferred on them and
nothing more. No amount of delay can turn an unlawful act
into
a valid administrative action. This is because apart from the
rule of law, section 33 of the Constitution prescribes
that
administrative action must be lawful.”
[77]
[142]
However, in
Khumalo
, Skweyiya J held that permitting
public bodies to challenge administrative decisions does not mean
“that the Constitution
has dispensed with the basic procedural
requirement that review proceedings are to be brought without undue
delay or with a court’s
discretion to overlook a delay.”
[78]
Khumalo
properly cited section 237 of the Constitution,
[79]
which demands that “[a]ll constitutional obligations must be
performed diligently and without delay”. The Court
elucidated that this constitutional demand—
“elevates expeditious and diligent compliance with
constitutional duties to an obligation in itself. The principle
is thus a requirement of legality.
This requirement is based on sound judicial policy that includes an
understanding of the strong public interest in both certainty
and
finality. People may base their actions on the assumption of
the lawfulness of a particular decision and the undoing
of the
decision threatens a myriad of consequent actions.
In addition, it is important to understand that the passage of a
considerable length of time may weaken the ability of a court
to
assess an instance of unlawfulness on the facts. . . . Thus the
very purpose of a court undertaking the review is potentially
undermined where, at the cause of a lengthy delay, its ability to
evaluate fully an allegation of illegality is impaired.”
[80]
[143]
Except in the unusual case where a “classical”
collateral challenge may be open to a state organ,
Khumalo
states the law concerning a government functionary’s delayed
attempt to set aside a decision outside of the usual avenues
of
judicial review. Simply put, reactive challenges may be brought
by state organs, provided that the delay is not unwarrantably
“undue”.
[81]
[144]
As I see it, the only arguably new question presented by the
first judgment is whether, in instances where the subject of the
review
implicates a court’s section 172(1)(a) obligations,
the Court should substitute
Khumalo
’s factual,
multi-factor, and context-sensitive framework for a strict rule that
delay can never prevent a court from deciding
the matter. In my
view, the answer is “no”.
Khumalo
made it
perspicuous that timely performance of constitutional obligations is
itself a constitutional concern.
[82]
Therefore, section 172(1)(a) cannot automatically subordinate section
237.
[145]
The first judgment’s approach resuscitates an argument
advanced by the minority in
Kirland
, and extended by the
minority in
Merafong
. After noting that the conduct of a
government official was inconsistent with sections 33 and 195 of the
Constitution, the
minority in
Kirland
argued for the
proposition that—
“[a] decision flowing from [conduct violating sections 33 and
195(1)] must not be allowed to remain in existence on the technical
basis that there was no application to have it reviewed and set
aside.”
[83]
And further that—
“[u]nder our Constitution the courts do not have the power to
make valid administrative conduct that is unconstitutional.”
[84]
[146]
But these sentiments did not prevail in those cases. The
majority judgment in
Kirland
held that the Court should not
decide the validity of the decision because “the government
respondents should have applied
to set aside the approval, by way of
formal counter application.”
[85]
In the absence of that challenge – reactive or otherwise –
the decision has legal consequences on the basis
of its factual
existence. One of the central benefits of this approach was
said to be that requiring a counter application
would require
the state organ to explain why it did not bring a timeous
challenge.
[86]
The same was required of the Municipality in
Merafong
.
[87]
[147]
This position does not derogate from the principles expounded
in cases like
Affordable Medicines Trust
and
Pharmaceutical
Manufacturers
.
[88]
These decisions make patent that any law or conduct that is
inconsistent with the Constitution is invalid to the extent of
its
inconsistency. This includes the exercise of public power.
Moreover, when confronted with unconstitutionality,
courts are bound
by the Constitution to make a declaration of invalidity. No
constitutional principle allows an unlawful
administrative decision
to “morph into a valid act”.
[89]
However, for the reasons developed through a long string of this
Court’s judgments, that declaration must be made by
a
court.
[90]
It is not open to any other party, public or private, to annex this
function. Our Constitution confers on the courts
the role of
arbiter of legality. Therefore, until a court is appropriately
approached and an allegedly unlawful exercise
of public power is
adjudicated upon, it has binding effect merely because of its factual
existence.
[148]
This important principle does not undermine the supremacy of
the Constitution or the doctrine of objective invalidity.
[91]
In the interests of certainty and the rule of law, it merely
preserves the fascia of legal authority until the decision is
set
aside by a court: the administrative act remains legally
effective
,
despite the fact that it may be objectively invalid.
[149]
This approach was endorsed and explained by a unanimous Court
in
Economic Freedom Fighters
.
[92]
There, Mogoeng CJ concluded that our constitutional order hinges on
the rule of law:
“No decision grounded on the Constitution or law may be
disregarded without recourse to a court of law. To do otherwise
would ‘amount to a licence to self-help’. Whether
the Public Protector’s decisions amount to administrative
action or not, the disregard for remedial action by those adversely
affected by it, amounts to taking the law into their own hands
and is
illegal. No binding and constitutionally or statutorily sourced
decision may be disregarded willy-nilly. It
has legal
consequences and must be complied with or acted upon. To
achieve the opposite outcome lawfully, an order of court
would have
to be obtained.”
[93]
[150]
An organ of state, like any other party, must therefore
challenge an administrative decision to escape its effects.
This it
can do reactively, provided its reasons for doing so are
sound, and there is no unwarranted delay.
Merits and delay
[151]
I agree with the first judgment that, on the merits, the
counter-application should be granted.
[94]
But this is not where the inquiry should start.
[95]
In light of the substantial delay in instituting the
counter-application, it must first be determined whether the
applicants
are time-barred from bringing their reactive challenge.
[152]
In
Khumalo
, this Court endorsed the approach adopted by
the Supreme Court of Appeal in
Gqwetha
[96]
that a plea of undue delay in bringing a review application by a
state organ is assessed by examining: (1) whether, on the facts,
the
delay is unreasonable or undue; and, if so (2) whether the court
should exercise its discretion to overlook the delay and nevertheless
entertain the application.
[97]
Was the delay
unreasonable or undue?
[153]
This Court has previously held that, when an applicant seeks
condonation for delay, a full explanation that covers the “entire
period” must be provided.
[98]
The first part of the
Khumalo
inquiry must follow these
guidelines. On 12 May 2010, Mr Mahlalela communicated his
decision to extend the contract
between the Department and Tasima.
Almost five years later, on 26 March 2015, the Department launched
its counter application.
The onus is thus on the Department to
explain why the delay of some five years was not unreasonable or
undue.
[154]
Hughes J in the High Court found that although the delay was
“very lengthy”, “it would be irresponsible and not
in the interests of justice” for the Court to avoid considering
the counter-application. In respect of the delay itself,
it
found that Mr Mahlalela actively “averted” attempts by
members of the Department to bring a review of the extension.
[99]
[155]
The Supreme Court of Appeal, having held that collateral
challenges are not open to state organs, and that the High Court did
not
purport to exercise its discretion in justifying the delay,
nevertheless considered whether the Department had sufficiently
justified
its dilatory behaviour.
[156]
The Supreme Court of Appeal concluded that Mr Mahlalela had
not been a sufficient obstacle to the Department bringing a review,
and that he had, in any event, vacated his position as
Director-General in February 2013, two years before the
counter-application
was brought. It found further that in the
same period, the Department had successfully brought a
counter-application in the
similar matter of
Prodiba
, which
suggested that there were fewer hindrances to bringing a review than
the Department had made out.
[100]
Finally, the Court determined that the Department could not rely on
allegations of fraud and corruption to explain the delay,
principally
because they were not cited as grounds of review in the High Court.
For these and other reasons, it concluded
that the Department’s
delay should not be condoned.
[157]
The Department’s chief justifications for their delay in
bringing review proceeding are as follows: (1) Mr Mahlalela, as the
Director-General of the Department, on numerous occasions refused to
give the instruction to bring a review against the extension;
(2) Mr
Letsoalo, the Department’s Chief Financial Officer, took
numerous steps to challenge the extensions through other
mechanisms,
including by: opening a criminal case in February 2013, instigating a
forensic investigation into the extension,
[101]
and reporting the extension to the Special Investigation Unit (SIU)
in August 2013;
[102]
and (3) a range of other officials in the Department sought to
prevent a review of the extension.
[158]
I am unconvinced that these explanations, on their own,
warrant a delay of five years. While Mr Mahlalela may have been
an
obstructive force, he did not prevent Mr Letsoalo from
bringing a review, nor was he employed by the Department after
February
2013. Even if other employees may have been similarly
uncooperative, the Department needed to do more than float
unsubstantiated
allegations of obstreperous behaviour in order to
justify the delay. This is especially true of a state organ,
which bears
extra constitutional obligations.
[103]
Moreover, the counter-application brought by the Department in
Prodiba
, a matter in which Mr Mahlalela was again implicated,
shows that the Department was not entirely stymied by his influence,
especially
after his period of office ended. Moreover, when
asked during the hearing, counsel for the Department admitted that
the period
after the departure of Mr Mahlalela was not “adequately”
explained away.
[159]
In respect of the delay itself, I am therefore persuaded that
the approach taken by the Supreme Court of Appeal was correct.
The explanation provided by the Department was both porous and lacked
the markings of good constitutional citizenship. But
this is
not the end of the inquiry. The delay cannot be “evaluated
in a vacuum”.
[104]
It must now be determined whether there are sound reasons for
overlooking the delay.
Should the delay be
overlooked?
[160]
While a court “should be slow to allow procedural
obstacles to prevent it from looking into a challenge to the
lawfulness
of an exercise of public power”, it is equally a
feature of the rule of law that undue delay should not be
tolerated.
[105]
Delay can prejudice the respondent, weaken the ability of a court to
consider the merits of a review, and undermine the public
interest in
bringing certainty and finality to administrative action.
[106]
A court should therefore exhibit vigilance, consideration and
propriety before overlooking a late review, reactive or otherwise.
[161]
The High Court found that because Mr Mahlalela’s letter
extending the contract did not comply with section 217(1) of the
Constitution
and section 38(1)(a)(iii) of the PFMA, it
fundamentally undermined the rule of law. The Court further
held that this
had significant budgetary and management implications
for the Department, which impacted negatively on the public purse,
and thus
also the public interest. Relying on
Prodiba
,
the High Court concluded that this unlawful matrix justified the
delay.
[162]
The Supreme Court of Appeal rejected the parallels drawn by
the High Court to
Prodiba
.
[107]
It found that as there was no delay in bringing the
counter-application in that case,
Prodiba
was not authority
for the proposition that delay in bringing a review can be justified
by a violation of the law.
[108]
It further concluded that the mere existence of allegations of fraud
and corruption around the extension could not be used
to overlook the
delay, because neither ground was argued on the papers. Tasima
had not been given proper opportunity to respond
to these claims, and
elevating the allegations to a justification for the delay would
therefore be prejudicial.
[109]
Finally, the Supreme Court of Appeal rejected the contention that
precluding the review would allow Tasima to entrench an
unlawful
contract for a further five years. It concluded that the
extension was “validated” by the delay, and
that the
Department in any case overplayed the possibility of
entrenchment.
[110]
[163]
In
Khumalo
, this Court emphasised that an important
consideration in assessing whether a delay should be overlooked is
the nature of the decision.
This was said to require,
“analysing the impugned decision within the legal challenge
made against it and considering the
merits of that challenge”.
[111]
[164]
The first judgment correctly finds that the extension was in
violation of the Constitution and the PFMA. I agree that the
flouting of ordinary procurement and tender proceedings was blatant.
Mr Mahlalela’s decision to override the decision
of the
previous Director-General is telling. Tasima protests that they
were not granted access to necessary documentation
to oppose the
counter-application. Be that as it may, the extension was not
lawful for the reasons already outlined.
[165]
On the other hand, the allegations of fraud and corruption
were not properly made, and therefore should not be considered.
Tasima vehemently denies the veracity of the allegations. These
were not properly ventilated before the High Court.
I therefore
do not think that the allegations can be considered in justifying the
delay.
[166]
The merits of the challenge are nonetheless compelling.
A web of maladministration surrounds the granting of the extension.
While “entrenchment” may be too strong a description, for
a five-year period, Tasima has been significantly enriched
on the
basis of an unlawful extension. It would be naïve for this
Court to ignore that state of affairs. The effect
on state
resources should also not be overlooked. Substantial unplanned
expenditure has occurred – both by the Department
and the
Corporation – as a consequence of the extension.
[167]
In
Merafong
, the Court noted that the Municipality
operated in an opaque legal environment.
[112]
What requirements had to be fulfilled by a state agent in order to
bring a reactive challenge, and what subsequent hurdles
had to be
flown were not yet manifest. The same is true of the Department
in this case. While they were not entitled
to sit idle and
await an enforcement challenge, the ambiguous legal position may have
contributed to their reticence. This
state of affairs is made
apparent by the drastic change of legal strategy adopted by the
applicants once they had enlisted new
counsel. Ordinarily, this
is no excuse. But in the current case, the law was indistinct,
and so the approach to be
taken was not obvious from the outset.
[168]
Merafong
also holds that whether the failure to
challenge the decision timeously was made in good faith may be a
reason for overlooking
delay. The Department in this case, by
its own admission, is plagued by poor management. The
Director-General who deposed
to the counter application admits that
it was brought as a means to get the Department’s house in
order. Nevertheless,
the Department has not acted in bad faith
in respect of the administrative decision. Its behaviour has
been muddled, but
not malicious.
[169]
This is borne out by the Department’s vigorous attempt
to have the extension reviewed before the High Court. Not only
is the decision-maker who made the decision now opposed to its
enforcement, but this also forms part of a conscious effort by the
Department to break with its dilatory past. This is in contrast
to the Minister’s approach in respect of the month-to-month
extensions granted before Mr Mahlalela’s letter of 10 May 2010.
[170]
But what is the prejudice suffered by Tasima in overlooking
the delay?
[113]
Condoning the delay does not prevent them from enforcing the Court
orders that have been granted in their favour. In
addition, the
contract extension itself has already expired. Setting aside
the extension at this point should not, therefore,
impact negatively
on Tasima going forward. It is also a factor that this Court
may rely on its section 172(1)(b) powers to
ameliorate the prejudice
suffered. It bears repeating that Tasima has, in addition,
benefitted greatly from the extension.
In my view, the
prejudice suffered is minimal, particularly in comparison to the
prejudice to be suffered by the Department and
the Corporation if the
counter-application is not condoned. This is consonant with the
dicta in
Khumalo
that, “consequences and potential
prejudice . . . ought not in general, to favour the Court non-suiting
an applicant in the
face of the delay.”
[114]
[171]
For these reasons, and in the unusual context of this case,
the Department’s undue delay in bringing the
counter-application
should be overlooked, and the reactive challenge
should succeed.
Contempt of court
proceedings
[172]
The next question is whether upholding the counter-application
should have any impact on the main application brought by Tasima.
The heart of its case in the High Court was that the applicants were
in breach and wilful contempt of various court orders, primarily
that
of Mabuse J.
[173]
The Department was refused leave to appeal the order of Mabuse
J granted on 17 October 2012 (Mabuse J order) by both Mabuse J and
the Supreme Court of Appeal. This denial of leave to appeal
does not, however, justify the Department’s failure to
have
what it viewed as unconstitutional set aside by this Court. An
appraisal of what occurred after the Mabuse J order was
handed down
illustrates the repeated opportunities and incentives the Department
had to set the order aside. It also brings
to the fore the
extent to which the Department flouted this, and subsequent, court
orders.
[174]
On 6 May 2013, the Supreme Court of Appeal denied leave to
appeal the Mabuse J order, but the order took effect on 6 December
2012,
the day Mabuse J refused leave to appeal. In March 2013,
Tasima initiated contempt proceedings in the High Court. As
a
result, Strijdom J issued an order (Strijdom J order) compelling the
Department to perform in accordance with the contract and
interdicting it from violating the contract’s terms. On 8
April 2013, Tasima again initiated contempt proceedings,
after which
the Department agreed to Tasima’s demands. Then, on
13 June 2013, Tasima again initiated contempt
proceedings.
These proceedings resulted in Ebersohn AJ declaring the Department to
be in contempt of both the Mabuse J order
and the Strijdom J order.
[175]
In August 2013, another contempt application by Tasima
resulted in a further court order. This order, issued by
Fabricius
J (Fabricius J order), required the Department to comply
with the Strijdom J order. Again in October 2013, Tasima
initiated
contempt proceedings. This resulted in an order by
Nkosi J declaring the Department in contempt of the Mabuse J order,
the
Strijdom J order and the Fabricius J order. And once
more, in January 2014, Tasima initiated contempt proceedings,
resulting
in an order by Rabie J interdicting the Department from
prematurely and unilaterally terminating the contract that was at the
very
heart of the order granted by Mabuse J.
[115]
Throughout these proceedings, the Department refrained from asking
this Court to set aside the Mabuse J order. Instead,
it
repeatedly defied multiple court orders, and only finally pursued
setting the Mabuse J order aside when Tasima sought, before
Hughes J,
to finalise several of the interdicts it had obtained.
[176]
The interim orders requiring compliance with the
contract extended by the decision of Mr Mahlalela are of legal effect
for the period
before the counter application succeeded.
Moreover, the various findings of contempt and suspended committal
made prior
to the High Court judgment are enforceable.
By
contrast, the finding of contempt and committal made by the Supreme
Court of Appeal and challenged in this Court stands to be
set aside.
This is because once the High Court orders lapsed as a result of the
Department’s successful reactive challenge
of the extension,
the interim interdicts could no longer be enforced.
[116]
This deduction does not, however, affect the period before the
reactive challenge was successfully brought.
Duty to
obey
[177]
The first judgment holds that it is inappropriate for the
courts to enforce an illegal contract.
[117]
This conclusion is supported by factual findings. It should not
be taken to mean that a party is entitled to ignore
a court order
enforcing a contract that is subsequently found to be unlawful.
[178]
The applicants have accepted this standpoint. In its
counter application, the Department stated explicitly that it
“accept[s]
that the respondents must always comply with a court
order until it is set aside”. They contended further that
“the
previous contempt of court orders were all complied
with”. Consequently, in their view, none of the orders
made before
the proceedings brought by Tasima in front of Hughes J
“have a bearing on the current application”. The
Corporation
took a similar view. They stated unequivocally
that, “not only does [the Corporation’s] conduct not
constitute
contempt but at no stage have we had any intention to
commit such contempt”. Neither party claimed that the
various
orders outlined above can be ignored with impunity, even if
the counter-application were to succeed.
[179]
That position is also supported by our law. The unique
role occupied by the Judiciary since the dawn of our democracy is
entrenched
in section 165(1) of the Constitution. In addition,
section 165(5) states:
“An order or decision issued by a court binds all persons to
whom and organs of state to which it applies.”
However, section 2
of the Constitution also makes vivid the venerability of the
Constitution:
“This Constitution is the supreme law of the Republic; law or
conduct inconsistent with it is invalid, and the obligations
imposed
by it must be fulfilled.”
[180]
The equipoise is tipped by section 172(2)(a), which states:
“The Supreme Court of Appeal, the High Court of South Africa or
a court of similar status may make an order concerning the
constitutional validity of an Act of Parliament, a provincial Act or
any conduct of the President,
but an order of constitutional
invalidity has no force unless it is confirmed by the Constitutional
Court
.”
This section culls
an exception that implies the general rule. Only an order of
constitutional invalidity requires confirmation
by the Constitutional
Court to take force. The general rule is that orders that
do
not
concern constitutional invalidity
do
have force from
the moment they are issued. And in light of section 165(5) of
the Constitution, the order is binding, irrespective
of whether or
not it is valid, until set aside.
[118]
[181]
The common law has long recognised this position. In
Honeyborne
, De Villiers CJ found that if an agent—
“were to be allowed to defy the authority of the court on the
ground of an error of judgment on the part of the court, the
question
would in every case be whether the magistrate is right in his reading
of the law or whether the agent is correct in his,
but there would be
no tribunal on the spot to decide between them. Undoubtedly it
is the duty of the agent to bow to the
decision of the court and to
seek his remedy elsewhere; and it is equally the duty of the court to
uphold its own dignity and see
that its authority is respected by the
practitioners before the court.”
[119]
[182]
This reading of section 165(5) accepts the Judiciary’s
fallibilities. As explained in the context of administrative
decisions, “administrators may err, and even . . . err
grossly.”
[120]
Surely the authors of the Constitution viewed Judges as equally
human. The creation of a judicial hierarchy that provides
for
appeals attests to this understanding. Like administrators,
Judges are capable of serious error. Nevertheless,
judicial
orders wrongly issued are not nullities. They exist in fact and
may have legal consequences.
[121]
[183]
So, in the current case, the Mabuse J order, which did not
declare any law or conduct constitutionally invalid, was enforceable
immediately after it was issued. This finding vindicates the
constitutionally-prescribed authority of the courts. The
obligation to obey court orders “has at its heart the very
effectiveness and legitimacy of the judicial system”.
[122]
Allowing parties to ignore court orders would shake the foundations
of the law, and compromise the status and constitutional
mandate of
the courts. The duty to obey court orders is the stanchion
around which a state founded on the supremacy of the
Constitution and
the rule of law is built.
[123]
[184]
The Corporation argues that because the extension expired on
30 April 2015, it was entitled to prepare itself for the imminent
transfer
of the eNaTIS, even if the counter-application brought by
the Department failed. This theme is taken up by the first
judgment,
which finds that the Mabuse J order “was not designed
to govern the parties’ obligations after termination of the
contract”.
[124]
Consequently—
“[t]he Department and the Corporation had to prepare themselves
for the transfer of the eNaTIS from Tasima upon the termination
of
the contract. What they did could not constitute a breach of
Mabuse J’s order that required the Department to perform
its
obligation under the agreement because as on 1 May 2015 that
agreement would have terminated.”
[125]
But this inference
is not supported by the facts. Schedule 15 of the Turnkey
Agreement makes clear that the content of the
transfer management
provisions apply “should [the Turnkey Agreement] or any part
thereof terminate or expire for any reason
whatsoever”.
At the point that the extension of the contract expired, the
Department and the Corporation were therefore
obliged to meet with
Tasima to forge a transfer management plan. They were not
entitled to institute transfer procedures
of their own. The
effect of the Mabuse J order was to preserve the enforceability of
the contract – including schedule
15 which effects the parties’
obligations after the expiry of the agreement – pending the
finalisation of the dispute
resolution process. Until this
occurred, the contract continued to run.
[185]
The expiry of the extension is thus no justification for
ignoring court orders. Not only was the Corporation bound by
the
orders that did not expressly impose obligations on it,
[126]
but the Fabricius J order unambiguously interdicted it from “taking
steps which have the effect of rerouting any of the work”
until
the Mabuse J order had run its course. The Corporation was not
permitted to assume that once the extension period had
expired, it
was entitled to take over the running of the system immediately.
Until the transfer management procedures have
run their course, or
the contract is set aside, the High Court orders continued to have
effect. I therefore cannot agree
with the first judgment’s
conclusion that “there are no facts on record showing that by
taking preparatory steps at
the beginning of 2015, the Department and
the Corporation were in contempt of various orders”.
[127]
For as long as the contract persisted, the High Court orders had to
be obeyed.
[186]
This is because the legal consequence that flows from
non-compliance with a court order is contempt.
[128]
The “essence” of contempt “
lies
in violating the dignity, repute or authority of the court.”
[129]
By disobeying multiple orders issued by the High Court, the
Department and the Corporation repeatedly violated that
Court’s
dignity, repute and authority and the dignity, repute and authority
of the Judiciary in general. That the underlying
order may have
been invalid does not erase the injury. Therefore, while a
court may, in the correct circumstances, find an
underlying court
order null and void and set it aside, this finding does not undermine
the principle that damage is done to courts
and the rule of law when
an order is disobeyed. A conclusion that an order is invalid
does not prevent a court from redressing
the injury wrought by
disobeying that order, and deterring future litigants from doing the
same, by holding the disobedient party
in contempt.
[187]
The essence of contempt brings us
back to the Constitution. Section 165(4) provides that
“[o]rgans of state, through
legislative and other measures,
must assist and protect the courts to ensure the independence,
impartiality, dignity, accessibility
and effectiveness of the
court”. Fundamentally, these measures must include
complying with a court order. As
the Supreme Court of
Appeal in
Meadow Glen
explained, we are “entitled to
expect” that our public bodies “make serious good faith
endeavours to comply with
[court orders]”, including by taking
the initiative to challenge decisions with which they disagree.
[130]
Neither the effectiveness nor the dignity of the
Judiciary is protected when an organ of state ignores a court order,
let alone
several. The Department, an organ of state, had a
duty, above and beyond that of the average litigant, to comply with
the
court orders. The integrity of the Constitution demanded
this.
[188]
The Department nevertheless contends
that there has been “no valid basis
ex
contractu
[arising from the contract]
for the purported extension. Accordingly the orders giving
effect to the purported extension could
not have been granted.”
The first judgment similarly finds that “
[i]n law
conduct or a decision taken in contravention of a statutory
prohibition is invalid”, and that the court orders therefore
had no consequence.
I disagree. The
Supreme Court of Appeal’s decision in
Motala
,
[131]
cited by the first judgment,
[132]
should not be relied upon to support this view. The only
post-1996 authority on which
Motala
relied for its conclusion on the effect of an invalid court order was
Von Abo II
.
[133]
In
Von Abo
,
the Government was ordered to take steps to remedy the violation of
the rights of a South African citizen living in Zimbabwe.
[134]
After a hearing relating to the Government’s compliance with a
first court order, a second order was issued concerning
damages.
[135]
It was only then that the Government appealed both orders.
[136]
[189]
This Court confronted the issue
whether the Government’s appeal against the first order was
perempted by its attempts to comply
with that order and its failure
to appeal it timeously.
[137]
Von Abo
explained that, were the first order wrong in law, the second would
be legally untenable.
[138]
The Government’s failure to appeal the first order could not
prevent the
court
from reaching a conclusion on the first order.
[139]
Von Abo
said nothing about the rights of
parties
to ignore a court order. Nor did
it take a view on whether a court must ignore the injury to the rule
of law suffered when
a party ignores a court order. The same is
true of the subsequent decision of the Supreme Court of Appeal in
Von
Abo II
, in which the first order was
set aside by the Court.
[140]
[190]
Even the pre-1996 cases on which
Motala
relied do not
support its conclusion. These ancient decisions’ findings
on validity occur in the context of a discussion
of the binding
nature of an invalid order on another court. In
Willis
,
the Court stated that the general rule is that a judgment without
jurisdiction “is ineffectual and null”.
[141]
But this comment is made in the context of assessing the limits of
res judicata
. Moreover, after writing in Latin that “one
who exercises jurisdiction out of his territory is not obeyed with
impunity,”
the Court immediately stated that this does not mean
“that an appeal may not generally be necessary to prevent
executions
being available”
.
[142]
The Latin speaks to courts; the clause which follows speaks to
parties. Prior to being set aside by a court, an order
can
still be executed, or, in the parlance of
Oudekraal
, has
“legal consequences”.
[143]
[191]
Lewis and Marks
is also
res judicata
oriented.
[144]
The Court there states that orders from proceedings with uncited
parties are “null and void;
and upon proof of invalidity the
decision may be disregarded
”
.
[145]
The act of proving something irresistibly implies the presence of a
court. It is the
court
that, once invalidity is proven,
can overturn the decision. The party does the proving, not the
disregarding. Parties
cannot usurp the court’s role in
making legal determinations.
[192]
Shifren
is to the same effect.
[146]
The Court there quoted Voet:
“If a decision is
ipso jure
void, there is no need of an
appeal. Nay the plaintiff can, notwithstanding the judicial decision,
set in motion once more the same
action, and will by a replication of
fraud or of nullity shut out a defence of
res judicata
which
has been raised against him by his opponent. Likewise on the
other side a defendant who is sued in the action
rei judicatae
on
a decision
ipso jure
void will easily evade such action by
setting up the nullity.”
[147]
The focus here was
on what effect an invalid order would have on another court.
The point is that the ordinary consequences
flowing from
res
judicata
do not apply where the original decision is “
ipso
jure
void”. This does not upset the requirement that
a court order must be appropriately challenged in order to be set
aside.
[193]
Other cases cited in
Motala
do make broader statements
concerning a party’s right to disregard an invalid order.
Sliom
, for example, stated that the order in that case “was
a nullity as far as [one of the parties] was concerned”.
[148]
But in reaching this position, the Court relied on
Lewis and
Marks
. I have already suggested that
Lewis and Marks
does not support that conclusion. The expansive
pronouncement in
Trade Fairs
is similarly unsound.
[149]
There, the Court stated:
“It would be incongruous if parties were to be bound by a
decision which is a nullity until a Court of an equal number of
Judges has to be constituted specially to hear this point and make
such a declaration”.
[150]
But
Trade Fairs
relied on
Shifren
, and
Shifren
did not speak to the
obligations of parties. Instead, it spoke to the obligations on
courts
where a previous decision is a nullity.
[194]
The issue of parties’ obligations to obey an order was
not an issue in either
Sliom
or
Trade Fairs
, and their
dicta on the effect of an invalid order on parties should be read in
this light. In fact, the issue of a party’s
obligations
was not before the court in all but one of the cases cited in
Motala
. That one exception,
Mkize
,
[151]
is inapposite for the determination of the current case. There,
a recently convicted defendant was found in contempt; shortly
after
resisting an order the judge was not authorised to give, while still
in court. On review, the Court held that the defendant
could
not have disobeyed an invalid order. The case is unhelpful
because, the finding of contempt coming immediately after
the order,
the defendant did not have the opportunity to set the invalid order
aside.
[152]
In this it bears some of the hallmarks of a “classical”
reactive challenge brought in the administrative law
context.
[153]
[195]
Motala
also endorsed the slightly different principle
that “a thing done contrary to a direct prohibition of the law
is void and
of no force and effect.”
[154]
The only case cited in support of this proposition,
Schierhout
,
considerably predates our Constitution.
[155]
And the “thing” in that case was not “done”
by a court of law.
[196]
Motala
’
s
final defect is that, in setting aside the order of contempt, it did
not even mention section 165(5) of the Constitution: a deficiency
shared by
Von Abo
.
In the latter case, the absence of section 165(5) is understandable
because the binding nature of court orders was not before
it.
This reinforces the point that the effect of an invalid court order
on parties was not at issue in that matter, and therefore
could not
have formed the basis for the conclusion that invalid court orders
can be ignored without more.
[197]
In any event,
Motala
dealt with a different issue.
There, Kruger AJ, sitting in the High Court, was found to have lacked
jurisdiction to appoint
judicial managers. The order was
treated as a nullity because it purported to exercise power that was
specifically assigned
to the Master by legislation.
[156]
In the present matter, Mabuse J clearly had jurisdiction to hear the
case. As explained in
Tsoga
,
Motala
is only
authority for the proposition that if a court “is able to
conclude that what the court [that made the original decision]
has
ordered cannot be done under the enabling legislation, the order is a
nullity and can be disregarded”.
[157]
This is a far cry from the inference that any court order that is
subsequently found to be based on an invalid exercise of
public power
can be ignored.
[198]
Whether or not the Mabuse J order is enforceable depends on
whether Mabuse J had the authority to make the decision that he
did
at the moment that he made it
. Thus, if the
extension had been challenged and set aside before Mabuse J made his
order, or even during those proceedings
by way of
counter-application,
[158]
then the Mabuse J order would be baseless and the implications set
out in the first judgment would follow. But, as the extension
was successfully challenged only after Mabuse J made his order, the
outcome of this review has no bearing on the order’s
validity.
The interdict granted by Mabuse J only falls away once the
counter-application is upheld by a court. Until
this point, it
is binding and enforceable.
[159]
[199]
The Department and the Corporation were thus obliged to comply
with all of the orders premised on the Mabuse J order until their
counter-application succeeded in front of Hughes J. The various
findings of contempt made by the Supreme Court of Appeal
must
consequently stand. That said, this is now water under the
bridge: the Department and the Corporation are no longer
required to
comply with the Mabuse J order in light of the success of the
counter-application. In the unique circumstances
of this case,
I am therefore unconvinced that an order of committal is
appropriate.
[160]
Remedy
[200]
To summarise: the Department’s counter-application is
upheld. From 23 June 2015, the date of Hughes J’s
order, the extension no longer had legal effect, and the interim
interdicts issued by the High Court fell away. Nevertheless,
in
the period between the granting of the extension and its setting
aside, the applicants were constitutionally obliged to comply
with
the various court orders granted.
[201]
What is a just and equitable order in the circumstances?
Tasima maintains that, should their application succeed, the transfer
management provisions set out in schedule 15 of the original
contract should govern the transfer of business to the Corporation.
They contend that the default transfer period is five years, and that
this period was previously accepted by the Department.
[202]
The Department and the Corporation argue that Tasima is
seeking to entrench its unlawful position. They contend that to
construe
Tasima’s litigation as aimed at compliance with court
orders is to see golden intentions where copper coins lie. In
their view, it is “private commercial gain” that animates
Tasima’s application. It was consequently wrong
of the
Supreme Court of Appeal to conclude that “the illegality or
otherwise of the contract is of no consequence”.
Instead,
the effect of the orders should be seen within the context of
Tasima’s monetary interests. Should their counter
application succeed, they therefore ask that the eNaTIS and related
services be handed over to the Corporation immediately.
[203]
Constitutionally-mandated remedies must be afforded for
violations of the Constitution.
[161]
This means providing effective relief for infringements of
constitutional rights.
[162]
Relief must also spring from breaches of the Constitution
generally. There can therefore be no doubt that upholding
the
High Court orders by enforcing the transfer management provisions of
the original contract is open to this Court. Not
only has
Tasima made commercial decisions on the basis of the High Court
orders, but doing so would also vindicate the high
esteem the
Constitution gives to the orders themselves.
[204]
Conversely, the effect of upholding the Department’s
application is to render the extension prospectively void.
Moreover,
it cannot be ignored that when Tasima contracted with the
Department, it took on an obligation to render public services.
As explained in
Allpay II
, at this point—
“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.”
[163]
[205]
In crafting an appropriate remedy, even where a range of court
orders have been violated, the interests of the public must remain
paramount.
[164]
This extends beyond considerations of the immediate consequences of
invalidity. As
Allpay II
expresses, primacy of the
public interest in procurement 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.”
[165]
[206]
In the present matter, not only was the extension of the
contract between the Department and Tasima unlawful, but it has now
expired.
It can only be in the best interests of the public
that the hand-over of the services and the eNaTIS to the Corporation
happens
as expeditiously as possible. While I recognise the
complexities that this process entails, in light of the success of
the
counter-application, I am unconvinced that five years is
necessary, nor that the unlawfully extended transfer management
provisions
are inevitably the correct vehicle for bringing the
hand-over into fruition.
[207]
The Supreme Court of Appeal found that, on the Department’s
version, a period between four and twelve months is
appropriate.
[166]
The High Court ordered that the hand-over occur within 30 days.
[167]
This latter period accords with the transfer management plan. I
am therefore of the view that hand-over should occur
within 30 days
of this order. In light of conceivable changes in
circumstances, the parties must meet within 10 days
to agree on how
the transfer is to be facilitated. Should this
agreement fail to
materialise, the transfer is to take place in accordance with the
Migration Plan set out in the Turnkey Agreement.
Order
[208]
The following order is made:
1. The application to lead new evidence is refused.
2. Leave to appeal is granted.
3. The appeal is upheld insofar as the counter application succeeds.
4. The order of the Supreme Court of Appeal is set aside and replaced
with the following:
“i.
Within 30 days of this order, Tasima is to hand over the services and
the electronic National Traffic Information System
to the Road
Traffic Management Corporation.
ii.
Unless an alternative transfer management plan is agreed to by the
parties within 10 days of this order, the hand over
is to be
conducted in terms of the Migration Plan set out in schedule 18 of
the Turnkey Agreement.”
5. The finding of contempt in part 1 of the order made by the Supreme
Court of Appeal is upheld for the period before the counter
application succeeded, but lapses thereafter.
6. Each party is to pay its own costs.
ZONDO
J (Mogoeng CJ, Bosielo AJ and Jafta J concurring):
[209]
I have had the opportunity of reading the judgment by my
Colleague, Jafta J (first judgment) as well as the judgment by my
Colleague,
Khampepe J (second judgment). I concur in Jafta J’s
judgment.
[210]
In the second judgment it is said that “…until a
court is appropriately approached and an allegedly unlawful exercise
of public power is adjudicated upon, it has a binding effect merely
because of its factual existence.”
[168]
In the next paragraph it
inter alia
says:
“In the interests of certainty and the rule of law, it merely
preserves the fascia of legal authority until the decision
is set
aside by a court: the administrative act remains legally effective,
despite the fact that it may be objectively invalid.”
[169]
The second
judgment
[170]
then says that this approach was endorsed by this Court in its
unanimous judgment in
Economic Freedom Fighters
.
[171]
I write to point out that this is not correct.
[211]
First of all, in
Economic Freedom Fighters
the validity
or lawfulness of the remedial action taken by the Public Protector
against the President – which was the administrative
action
under consideration – was not challenged by the President.
The President conceded that the administrative action
was valid and
binding. This is the context in which what this Court said in
Economic Freedom Fighters
should be understood. It was
not called upon to decide what should happen where the person against
whom an administrative
action has been taken argues that the
administrative action is unlawful or invalid. Statements made
in
Economic Freedom Fighters
were made in the context of an
administrative action that was accepted by all to be valid and
lawful.
[212]
Furthermore, even the paragraph on which the second judgment
relies to support the proposition does not really support the
proposition.
The paragraph reads:
“
No decision grounded on the Constitution or law may be
disregarded without recourse to a court of law
. To do
otherwise would ‘amount to a licence to self-help’.
Whether the Public Protector’s decisions
amount to
administrative action or not, the disregard for remedial action by
those adversely affected by it, amounts to taking
the law into their
own hands and is illegal.
No binding and constitutionally or
statutorily sourced decision may be disregarded willy-nilly
.
It has legal consequences and must be complied with or acted upon.
To achieve the opposite outcome lawfully, an order
of court would
have to be obtained.”
[172]
[213]
In this passage, Mogoeng CJ makes it clear that he is
referring to a “decision grounded on the Constitution or law.”
He says that no such decision “may be disregarded without
recourse to a court of law”. He goes on: “To
do
otherwise would amount to a licence to self-help.” He
states: “No binding and constitutionally or statutorily
sourced
decision may be disregarded willy–nilly.” When,
towards the end of the passage, he says: “It has
legal
consequences and must be complied with or acted upon”, he is
referring to a “decision grounded on the Constitution
or law”
to which he made reference at the beginning of the passage.
When, later on, the Chief Justice says that “.
. . remedial
action taken against those under investigation cannot be ignored
without any legal consequences”,
[173]
he is still talking about remedial action that is “grounded”
in the Constitution and the law, as he said in the passage
quoted
above.
[214]
In the paragraph that appears immediately after the passage
relied upon by the second judgment, the Chief Justice once again
makes
a statement that makes it clear that he is referring to a valid
or lawful decision in the sense that it is made by a person who
has
constitutional or legal power to make it. He says: “The
rule of law requires that no power be exercised unless
it is
sanctioned by law and
no decision or step sanctioned by law may be
ignored based purely on a contrary view we hold
.”
[174]
[215]
Later on, the Chief Justice said:
“Neither the President nor the National Assembly was entitled
to respond to the binding remedial action taken by the
Public
Protector as if it is of no force or effect or has been set aside
through a proper judicial process
.”
[175]
[216]
In the light of the above it is not correct to suggest that
the decision of this Court in
Economic Freedom Fighters
supports the proposition that an invalid or unlawful decision is
binding until set aside.
[217]
I also just want to point out that some judgments create the
impression that, when a body or functionary has taken an
administrative
action against someone, if that person neither
complies with nor takes the administrative action on review, that
would be the end
of the administrative action. That is not so.
When an administrative action has been taken and the person against
whom
it has been taken does not comply – whether because he or
she thinks it is unlawful or invalid or for any reason – the
taker of the administrative action has a right to institute court
proceedings to enforce it and the person against whom the
administrative
action was taken has a chance to put his or her case
before the court and the court will decide. Sometimes, the
enforcement
proceedings may be instituted by the person for whose
benefit the administrative action has been taken or made. Under
the
Labour Relations Act (LRA),
[176]
if an employee has obtained an arbitration award – which is an
administrative action in terms of this Court’s decision
in
Sidumo
[177]
– ordering the employer to reinstate him and the employer fails
or refuses to reinstate him and does not take the award on
review,
the employee brings an application in the Labour Court under
section 158(1)(c)
[178]
of the LRA to make the award an order of the Labour Court. That
is a procedure for the enforcement of the award. The
employer
may oppose the application.
[218]
Since preparing the earlier draft of this judgment, Froneman J
has prepared a judgment (fourth judgment) which I have had the
opportunity
of reading. Certain aspects of the fourth judgment
are dealt with in the first judgment. The purpose of my
judgment
was to clarify and emphasise that, in reading or
interpreting this Court’s decision in
Economic Freedom
Fighters
or in assessing its effect, we must always bear in mind
what the issues before the Court were. In other words, we must
read
and interpret that decision in its context. In this regard
I have pointed out that
Economic Freedom Fighters
was not
a case in which the validity or lawfulness of the administrative
action was in issue. The fourth judgment seems to
have a
quarrel with my drawing attention to these features of that case.
I fail to see what is perceived to be wrong with
pointing these out.
[219]
The fourth judgment seems to quarrel with the notion that
statements used in
Economic Freedom Fighters
must be
understood against the fact that the administrative action that was
considered was accepted by all as valid and binding
and that that is
why in that judgment there are a number of references to “decisions
grounded in the Constitution or law”
and to “binding and
constitutionally or statutorily sourced decision”. This
is simply factually true. The
fourth judgment does not dispute
that the validity or lawfulness of the administrative action was not
in issue in
Economic Freedom Fighters
. Nor does it say
why it would have been necessary for this Court to repeatedly refer
to decisions “grounded on the
Constitution or law” or to
“binding and constitutionally or statutorily sourced decision”
if it was not to emphasise
that the Court was dealing with an
administrative action that was lawful or valid.
[220]
At the end of the fourth judgment a question is asked as to
how
Economic Freedom Fighters
would have been decided if the
President had not conceded that the Public Protector’s
administrative action was valid and
binding. The question is
besides the point. The issue here is whether the
Economic
Freedom Fighters
decision must or must not be understood in the
context that the Public Protector’s remedial action was
accepted by all concerned
as valid and binding. The answer is:
Yes, it must because that is true.
[221]
The fourth judgment refers to the importance of following
precedent. I agree that following precedent is very important
but
consistency in adjudication is also very important. In
Maphango
[179]
I pointed out in my minority judgment that the majority judgment was
granting the applicant relief that it had not asked for.
[180]
In
Bel Porto
,
[181]
a decision of this Court, Chaskalson CJ, writing for the majority,
had made it clear that it was not permissible to grant a party
relief
that it had not asked for.
[182]
I highlighted this in my judgment.
[183]
The majority went ahead and granted the applicants relief that they
had not asked for and, in this way, did not follow
Bel Porto
.
Mogoeng CJ and Jafta J concurred in my judgment. The
author of the fourth judgment did not on that occasion
emphasise the
importance of respecting precedent. Instead, he was party to
the majority judgment. Although, in addition,
he wrote a
separate judgment, that judgment did not acknowledge the precedent of
Bel Porto
nor it did say that
Bel Porto
was
distinguishable or was not binding. In other words, it did not
advance any of the grounds recognised in law as justifying
not
following a precedent.
[222]
In
KwaZulu-Natal Joint Liaison Committee
[184]
the majority decided the matter in favour of the applicant on a basis
that was not part of the applicant’s case as set out
in its
founding affidavit. They did this despite the fact that, during
the hearing, Counsel for the applicant had repeatedly
disavowed any
reliance on the basis relied upon by the majority judgment to grant
the applicant relief. Deciding the matter
on a
basis that fell
outside the applicant’s founding affidavit went against the
rule of practice that in motion proceedings a
party stands or falls
by its papers. In my minority judgment
[185]
I highlighted the fact that there were a number of decisions of this
Court that had affirmed this rule of practice.
[186]
Mogoeng CJ and Jafta J concurred in my judgment.
[223]
The majority judgment went against those decisions. On
that occasion, too, the author of the fourth judgment did not
emphasise
the importance of precedent. Instead, he was party to
the majority judgment. Although, in addition, he wrote a
separate
judgment, that judgment did not acknowledge the existence of
precedent in the form of various decisions of this Court affirming
the rule of practice nor did that judgment say that those decisions
were distinguishable or were clearly wrong or were not binding.
In other words neither the majority judgment nor the separate
judgment advanced any of the grounds recognised in law as justifying
not following a precedent. There may be more cases to add here
but it is not necessary to do so. Both in
Maphango
and
KwaZulu-Natal Joint Laison Committee
the result would have
been different if, in the case of
Maphango, Bel Porto
had been
followed and, in the case of
KwaZulu-Natal Joint Laison Committee,
Bel Porto
and other decisions of this Court had been followed.
FRONEMAN J (Khampepe
J, Madlanga J, Mhlantla J and Nkabinde J concurring):
[224]
I concur in the judgment of Khampepe J, for the reasons she
gives. But I consider it necessary to add some additional
reasons
of my own.
After the majority
judgment in
Doctors for Life,
[187]
the precedent it established was applied in
Merafong
Demarcation
.
[188]
The majority judgment in
Merafong Demarcation
was written by
one of the dissenters in
Doctors for Life
(Van der Westhuizen
J) and concurred in by two of the other earlier dissenters (Yacoob
and Skweyiya JJ). The precedents set
by the majority judgments
in
Kirland
and
Khumalo
have not been so fortunate in
their treatment by some of those who did not originally agree with
them.
[225]
As pointed out in Khampepe J’s judgment, this Court has
now “through a long string of . . . judgments” endorsed
and clarified
Oudekraal
.
[189]
Yet time and again its treatment of
Oudekraal
and the
principles it established has been re-questioned.
[190]
As she points out “[t]he first judgment’s approach
resuscitates an argument advanced by the minority in
Kirland
,
and extended by the minority in
Merafong
”.
[191]
[226]
It is an individual choice how to react to a majority judgment
one originally disagreed with, but as one who agreed with the
majority
judgments in both
Kirland
and
Khumalo,
my
reconsideration of them must be through the lens of this Court’s
established doctrine. This Court has stated what
the approach
to overturning precedent should be. The majority judgment in
Turnbull-Jackson
made it clear: the previous decision must not
merely be wrong – it must be
clearly
wrong.
[192]
I do not consider
Kirland
and
Khumalo
to be wrong, and
certainly not clearly wrong. They establish an important
bulwark for the rule of law, to prevent administrative
and executive
self-help, and provide a flexible criterion to ensure that state
organs correct perceived wrongs timeously.
[227]
One would have hoped that the significance of at least
Kirland
’s contribution to upholding the importance of
the rule of law in a principled and pragmatic way would have been
settled when
it was endorsed in the unanimous judgment of this Court,
written by the Chief Justice, in
Economic Freedom Fighters
.
[193]
But unfortunately that has now been cast in unnecessary doubt.
[228]
In the second judgment Khampepe J states the principle that
“until a court is appropriately approached and an allegedly
unlawful
exercise of public power is adjudicated upon, it has binding
effect merely because of its factual existence”.
[194]
She then alludes to the fact that “this approach was endorsed
and explained by a unanimous Court in
Economic Freedom
Fighters
”.
[195]
She quotes part of the judgment in support of this statement.
[229]
In his judgment Zondo J feels compelled to write “to
point out that this is not correct”. But it
is
correct. The paragraph from the
Economic Freedom Fighters
judgment includes a quotation from
Kirland
itself. It is
necessary to refute the claim that Khampepe J “is not
correct”. It is easy to do so.
One need merely
repeat in full this paragraph in the judgment by Mogoeng CJ in
Economic Freedom Fighters
:
“This is so, because our constitutional order hinges also on
the rule of law. No decision grounded on the Constitution
or
law may be disregarded without recourse to a court of law. To
do otherwise would ‘amount to a licence to self-help’.
Whether the Public Protector’s decisions amount to
administrative action or not, the disregard for remedial action by
those
adversely affected by it, amounts to taking the law into their
own hands and is illegal. No binding and constitutionally or
statutorily sourced decision may be disregarded willy-nilly. It
has legal consequences and must be complied with or acted
upon.
To achieve the opposite outcome lawfully, an order of court would
have to be obtained. This was aptly summed
up by Cameron J in
Kirland
as follows:
‘The
fundamental notion – that official conduct that is vulnerable
to challenge may have legal consequences and may
not be ignored until
properly set aside – springs deeply from the rule of law.
The courts alone, and not public officials,
are the arbiters of
legality. As Khampepe J stated in
Welkom
. . .‘(t)he
rule of law obliges an organ of state to use the correct legal
process.’ For a public official to
ignore
irregular
administrative action on the basis that it is a nullity amounts to
self-help.
And it invites a vortex of uncertainty,
unpredictability and irrationality.’”
[196]
[230]
Shortly before the hearing in
Economic Freedom Fighters
the
President made a concession. He stated on record that he
accepted the legal and constitutional validity of the Public
Protector’s report. That concession is neither the
ratio
nor the logical underpinning of the
ratio
of the
Economic
Freedom Fighters
judgment by this Court. Is it seriously
intended to state or imply that if the President did not make the
concession then
this Court’s decision would have been
different? And that this Court would have concluded that the
President was entitled
to ignore the Public Protector’s report
without approaching a court of law to have it set aside? Surely
not.
[231]
In his judgment Zondo J refers to instances in
Maphango
[197]
and
KwaZulu Natal Joint Liaison Committee
,
[198]
where he contends my approach to existing precedent was inconsistent
with the approach taken in this judgment. In each of
those
cases, I wrote separate concurring judgments, attempting to explain
and justify the approach I took there.
[199]
Whether these were sufficiently grounded or not, is for posterity to
decide. If they were wrong, they nevertheless
do not justify
making a similar mistake.
For the Applicants:
J Gauntlett SC, D
Unterhalter SC, J Motepe SC, M du Plessis and F Pelser
instructed by Seleke Attorneys and the State Attorney
For the Respondent:
A Franklin SC, J
McNally SC and A Rowan instructed by Webber Wentzel
[1]
Merafong City Local Municipality v AngloGold Ashanti Limited
[2016] ZACC 35
(
Merafong
).
[2]
Id at para 146.
[3]
Section 217 of the Constitution provides:
“(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 organs of state or
institutions referred to in that subsection from implementing a
procurement policy providing for
(a) categories of preference in the allocation 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.”
[4]
29 of 1999.
[5]
Parliament’s Standing Committee On Public Accounts.
[6]
Tasima (Pty) Ltd v The Department of Transport
, unreported
judgment of the North Gauteng High Court, Pretoria, Case No
44095/2012 (17 October 2012).
[7]
Id at paras 28-30.
[8]
Id at paras 31 and 35.
[9]
Tasima (Pty) Ltd v Department of Transport
[2015] ZAGPPHC 421
(Hughes J judgment) at para 25.
[10]
Minister of Transport NO v Prodiba (Pty) Ltd
[2015] ZASCA 38
;
[2015] 2 All SA 387
(SCA) (
Prodiba
)
.
[11]
Hughes J judgment above n 9 at paras 66-7.
[12]
Id at para 96.
[13]
Tasima (Pty) Ltd v Department of Transport
[2015] ZASCA 200
;
[2016] All SA 1
465 (SCA) (SCA Judgment).
[14]
Id at para 23.
[15]
3 of 2000.
[16]
Oudekraal Estates (Pty) Ltd v The City of Cape Town
[2004]
ZASCA 48
;
2004 (6) SA 222
(SCA) (
Oudekraal
).
[17]
MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd
t/a Eye & Lazer Institute
[2014] ZACC 6
;
2014 (3) SA 481
(CC);
2014 (5) BCLR 547
(CC) (
Kirland
).
[18]
Rule 31(1) provides:
“Any party to any proceedings before the Court and an
amicus
curiae
properly admitted by the Court in any proceedings shall
be entitled, in documents lodged with the Registrar in terms of
these
rules, to canvass factual material that is relevant to the
determination of the issues before the Court and that does not
specifically
appear on the record: Provided that such facts—
(a) are common cause or otherwise incontrovertible; or
(b) are of an official, scientific, technical or statistical nature
capable of easy verification.”
[19]
Supreme Court of Appeal judgment above n 13 at para 24.
[20]
Id at para 31.
[21]
Id at para 35.
[22]
Section 172(1), in relevant part, provides:
“When deciding a constitutional matter within its power, a
court—
(a) must declare that any law or conduct that is inconsistent with
the Constitution is invalid to the extent of its inconsistency.”
[23]
Hughes J judgment above n 9 at paras 66-7.
[24]
SCA judgment above n 13 at para 25.
[25]
Id at para 30.
[26]
Section 33(1) provides:
“Everyone has
the right to administrative action that is lawful, reasonable and
procedurally fair.”
[27]
Kwa Sani Municipality v Underberg/Himeville Community Watch
Association
[2015] ZASCA 24
;
[2015] 2 All SA 657
(SCA) (
Kwa
Sani Municipality
).
[28]
Merafong
City Local
Municipality v AngloGold Ashanti Limited
[2015] ZASCA 85
;
2016
(2) SA 176
(SCA) (
Merafong SCA
).
[29]
Kwa Sani Municipality
above n 27 at para 14.
[30]
Oudekraal
above n 16.
[31]
Boddington v British Transport Police
[1998] UKHL 13
;
[1999]
2 AC 143
[HL]; [1998] 2 All ER 203; [1998] 2 WLR.
[32]
Id at 153H-154A and 161C-D.
[33]
Id at 173E-G.
[34]
Oudekraal
above n 16 at para 29.
[35]
Id.
[36]
Id at para 32.
[37]
Id at para 31.
[38]
Kirland
above n 17.
[39]
SCA judgment above n 13 at para 27.
[40]
Master of the High Court Northern Gauteng High Court, Pretoria
v Motala NO
[2011] ZASCA 238
;
2012 (3) SA 325
(SCA)
(
Motala
) at para 14;
Cool Ideas 1186 CC v Hubbard
[2014] ZACC 16
;
2014 (4) SA 474
(CC);
2014 (8) BCLR 869
(CC) at
paras 90-3.
[41]
Treasury Regulation 16.A6.4 provides:
“If in a specific case it is impractical to invite competitive
bids, the accounting officer or accounting authority may
procure
goods or services by other means, provided the reasons for deviating
from inviting competitive bids must be recorded.”
[42]
Prodiba
above n 10 at para 40.
[43]
Steenkamp
NO v
Provincial Tender Board of the Eastern Cape
[2006] ZACC 16
;
2007
(3) SA 121
(CC);
2007 (3) BCLR 300
(CC) at paras 33-5.
[44]
Glenister
v President of
the Republic of South Africa
[2011] ZACC 6; 2011 (3) SA 347
(CC); 2011 (7) BCLR 651 (CC).
[45]
Id at para 166.
[46]
South African Association of Personal Injury Lawyers
v
Heath
[2000]
ZACC 22
;
2001 (1) SA 883
(CC);
2001 (1) BCLR 77
(CC) (
Heath
).
[47]
Id at para 4.
[48]
Soobramoney
v Minister
of Health (KwaZulu-Natal)
[1997] ZACC 17; 1998 (1) SA 765 (CC);
1997 (12) BCLR 1696 (CC).
[49]
Id at para 8.
[50]
The entire order is quoted in [40] above.
[51]
Economic Freedom Fighters v Speaker of the National Assembly
[2016] ZACC 11
;
2016 (5) BCLR 618
(CC);
2016 (3) SA 580
(CC)
(
Economic Freedom Fighters
).
[52]
Kirland
above n 17 at para 106.
[53]
Affordable Medicines Trust v Minister of Health
[2005] ZACC
3; 2006 (3) SA 247 (CC); 2005 (6) BCLR 529 (CC).
[54]
Minister of Health v New Clicks South Africa (Pty) Ltd
[2005]
ZACC 14; 2006 (2) SA 311 (CC); 2006 (1) BCLR 1 (CC).
[55]
Pharmaceutical Manufacturers Association of South Africa: In re
Ex Parte President of the Republic of South Africa
[2000] ZACC
1
;
2000 (2) SA 674
(CC);
2000 (3) BCLR 241
(CC) (
Pharmaceutical
Manufacturers
).
[56]
Oudekraal
above n 16 at paras 29-30.
[57]
Second judgment [146].
[58]
Kirland
above n 17 at para 81.
[59]
Khumalo
v Member of the Executive Council for Education: KwaZulu Natal
[2013] ZACC 49
;
2014 (3) BCLR 333
(CC);
2014 (5) SA 579
(CC)
(
Khumalo
) at para 45.
[60]
I use the term “reactive challenge” rather than
“collateral challenge” in line with the reasoning of
my
brother Cameron J in
Merafong
above n 1. These
challenges are “reactive” because they are raised in
proceedings that are not themselves designed
to impeach the validity
of the act in question. See
Merafong
at para 26 and
National Industrial Council v Photocircuit
1993 (2) SA 245
(C) at 253A-B.
[61]
The first judgment [48] refers to this specifically as the
“counter-application”; terminology I adopt in this
judgment.
In contrast, I use “counter application”
to refer to the counter application filed in the High Court in its
entirety.
[62]
The first judgment [50] refers to this as the “collateral
challenge”. I prefer the term “‘classical’
collateral challenge” in line with the reasoning in
Merafong
above n 1 at paras 69-70.
[63]
Classical collateral challenges are geared towards protecting
certain core interests (often, but not exclusively, liberty and
property) of a person who is being legally coerced into an action
without having been afforded sufficient opportunity to challenge
the
law permitting the coercive administrative act. See
Oudekraal
above n
16 at para 32.
Whether a classical collateral challenge is appropriate depends on
“the particular statutory context”
through which the
coercive act operates. See
Boddington
above n 31 at 215. Not all reactive challenges need be made
defensively under the threat of coercion. For example,
in the
current case, the Department’s counter-application is raised
as a positive attack on the validity of the extension.
See
further
Attorney-General of Natal v Johnstone & Co Ltd
1946
AD 256
and also
3M South Africa (Pty) Ltd v Commissioner of the
South African Revenue Service
[2010] ZASCA 20; [2010] 3 All SA
361 (SCA).
[64]
First judgment [111]-[120].
[65]
First judgment [120].
[66]
See
Merafong
above n 1 at paras 26-30.
[67]
Id at para 30.
[68]
Id at paras 31-8.
[69]
In
Pepcor Retirement Fund v Financial Services Board
[2003]
(6) SA 38
(SCA);
[2003] All SA 21
(SCA) (
Pepcor
) at paras
10-5 the Supreme Court of Appeal found that the public interest
“entitled”, and in some cases “obligated”,
the Registrar of Pension Funds to challenge the issuing of certain
certificates made by his own office. In
Municipal Manager:
Qaukeni v F V General Trading CC
2010 (1) SA 356
(SCA);
2009 4
All SA 231
(SCA) at paras 23-7 the same Court found that the
Municipal Manager of the Qaukeni Local Municipality was permitted to
impugn,
notably by way of counter application, the validity of a
services procurement contract entered into by the Municipality.
Again the Court stressed that this prerogative was emergent out of
the Municipality being “a body created to serve the
citizens
of the country”.
[70]
Khumalo
above n 59 at para 32.
[71]
Id at para 45.
[72]
Merafong
above n 1 at para 82.
[73]
Whether an organ of state is entitled to raise a “classical”
collateral challenge need not be decided here.
It is
sufficient to note that the applicants are entitled to rely on the
Department’s counter-application.
[74]
First judgment [86].
[75]
Id [80].
[76]
Id [78].
[77]
Id [81].
[78]
Khumalo
above n 59 at para 45. The majority judgment in
Khumalo
came to this conclusion on the basis that the review
in that matter was not brought in terms of PAJA. The question
of whether
challenges, reactive or otherwise, to exercises of public
power by the state can be initiated through PAJA need not be decided
here. It suffices to note that the dictates of section 237
require that any delay in bringing such a challenge be properly
justified, irrespective of how the review is classified.
[79]
Id at paras 46-8.
[80]
Id.
[81]
Id at para 45.
[82]
Id at paras 46-8.
[83]
Kirland
above n 17 at para 43.
[84]
Id at para 60.
[85]
Id at para 82.
[86]
Id at para 83.
[87]
Merafong
above n 1 at para 40.
[88]
Affordable Medicines Trust
above n 53 at paras 45-50
;
Pharmaceutical Manufacturers
above n 55 at paras 8-9.
[89]
Kirland
above n 17 at para 103.
[90]
Merafong
above n 1 at para 42;
Kirland
above n 17 at
paras 101-3;
Camps Bay Ratepayers’ Association v Harrison
[2010] ZACC 19
;
2011 (4) SA 42
(CC);
2011 (2) BCLR 121
(CC) at
para 62;
Bengwenyama Minerals (Pty) Ltd v Genorah Resources (Pty)
Ltd
[2010] ZACC 26
;
2011 (4) SA 113
(CC);
2011 (3) BCLR 229
(CC)
at para 85. For this principle’s application in the
context of school admission policies, see
MEC for Education,
Gauteng Province v Governing Body, Rivonia Primary School
[2013]
ZACC 34
;
2013 (6) SA 582
(CC);
2013 (12) BCLR 1365
(CC);
Head of
Department, Department of Education, Free State Province v Welkom
High School; Head of Department, Department of Education,
Free State
Province v Harmony High School
[2013] ZACC 25
;
2014 (2) SA 228
(CC);
2013 (9) BCLR 989
(CC) (
Welkom
);
Head of Department,
Mpumalanga Department of Education v Hoërskool Ermelo
[2009]
ZACC 32
;
2010 (2) SA 415
(CC);
2010 (3) BCLR 177
(CC).
[91]
See the discussion of the minority in
Merafong
above n 1 at
paras 134-6.
[92]
Economic Freedom Fighters
above n 51.
[93]
Id at para 74.
[94]
First judgment [131].
[95]
Merafong
above n 1 at para 81.
[96]
Gqwetha v Transkei Development Corporation Ltd
[2005] ZASCA
51; 2006 (2) SA 603 (SCA).
[97]
Khumalo
above n 59 at para 49.
[98]
Van Wyk v Unitas Hospital
[2007] ZACC 24
;
2008 (2) SA 472
(CC);
2008 (4) BCLR 442
(CC) at para 22.
[99]
Hughes J judgment above n 9 at para 97.
[100]
Prodiba
above n 10.
[101]
The investigation was finalised on 21 August 2014.
[102]
The SIU report was finally deposed to on 20 March 2015.
[103]
Khumalo
above n 59 at para 51.
[104]
Id at para 52.
[105]
Id at paras 45-6. See also
National Treasury v Opposition
to Urban Tolling Alliance
[2012] ZACC 18
;
2012 (6) SA 223
(CC);
2012 (11) BCLR 1148
(CC) at para 26.
[106]
Gqwetha
above n 96 at para 22;
Khumalo
above n 59 at
paras 47-8.
[107]
See SCA judgment above n 13 at para 24.
[108]
Id at paras 24 and 30.
[109]
Id at para 35.
[110]
Id at para 38.
[111]
Khumalo
above n 59 at para 57.
[112]
Merafong
above n 1 at para 76.
[113]
Khumalo
above n 59 at para 52.
[114]
Id at para 56.
[115]
I refer to the orders of Mabuse J, Strijdom J, Ebersohn AJ,
Fabricius J, Nkosi J and Rabie J as the “High Court Orders”.
[116]
Mabuse J granted an interim interdict, “pending the
finalisation of the dispute resolution proceedings instituted by
[Tasima]”. The purpose of these proceedings was to
determine the validity of the extension. Now that it has been
determined that the extension was invalid, the interim interdict,
and the subsequent orders made to enforce it, lapse.
[117]
First judgment [37].
[118]
Even though courts do not have the purse or sword to enforce their
orders, the effect of their decision is binding in law.
[119]
In re Honeyborne
(1876) 7 Buch 145 at 150 (
Honeyborne
).
See further the discussion in
S v Zungo
1966 (1) SA 268
(N)
at 271B.
[120]
Kirland
above n 17 at para 90.
[121]
Id.
[122]
Victoria Park Ratepayers’ Association v Greyvenouw CC
[2004] 3 All SA 623
(SE) at para 23.
[123]
See
Pheko v Ekurhuleni Metropolitan Municipality (No 2
)
[2015] ZACC 10
;
2015 (5) SA 600
(CC);
2015 (6) BCLR 711
(CC) (
Pheko
II
) at para 1.
[124]
First judgment at [115].
[125]
Id at [114].
[126]
Pheko II
above n 123 at para 47.
[127]
First judgment [120].
[128]
Pheko II
at para 28;
S v Beyers
1968
(3) SA 70 (A).
[129]
Fakie NO v CCII Systems (Pty) Ltd
[2006] ZASCA 50
;
2006 (4)
SA 326
(SCA) at para 6.
[130]
Meadow Glen Home Owners Association v City of Tshwane
Metropolitan Municipality
[2014] ZASCA 209
;
2015 (2) SA 413
(SCA) at para 8.
[131]
Motala
above n 40.
[132]
First judgment at [
97
].
[133]
Motala
above n 40 at paras 12-5;
Government of the
Republic of South Africa v Von Abo
2011 (5) SA 262
(SCA);
2011 3
All SA 261
(SCA) (
Von Abo II
);
Von Abo v President of the
Republic of South Africa
[2009] ZACC 15
;
2009 (5) SA 345
(CC);
2009 (10) BCLR 1052
(CC) (
Von Abo
).
[134]
Von Abo
id at paras 7-12.
[135]
Id at para 12.
[136]
Id at para 13.
[137]
Id at paras 14 and 25.
[138]
Id at paras 18 and 51-3.
[139]
Id.
[140]
Von Abo II
above n 133 at para 19.
[141]
Willis v Cauvin
(1883) 4 NLR 97
at 98.
[142]
Id at 98-9.
[143]
Oudekraal
above n 16 at para 26.
[144]
Lewis and Marks v Middel
1904 TS 291.
[145]
Id at 303. My emphasis.
[146]
Suid-Afrikaanse Sentrale Ko-operatiewe Graanmaatskappy Bpk v
Shifren and the Taxing Master
[1964] 1 All SA 154
(O) (
Shifren
)
at 156.
[147]
Id.
[148]
Sliom v Wallach’s Printing and Publishing Co., Ltd
.
1925 TPD 650
at 656.
[149]
Trade Fairs and
Promotions (Pty) Ltd v Thomson
[1984]
4 All SA 478
(W) (
Trade Fairs
).
[150]
Id at 183C.
[151]
The
State v Mkize
[1962] 2 All SA 472 (N).
[152]
See similarly
S v Ngcemu
1964 (3) SA 665
(N), in which the
defendant was found to be entitled to refuse a Magistrate’s
decision that he immediately continue his
defence on the grounds
that the decision was unlawful.
[153]
Our case law does not support a rigid, doctrinal approach to
reactive challenges to court orders. There may be a limited
set of circumstances where a court order does not need to be set
aside. This is especially so where a party has not been
given
the opportunity to appeal or review the decision. In any
event, this is not one of those cases.
[154]
Motala
above n 40 at para 14.
[155]
Schierhout v Minister of Justice
1926 AD 99.
[156]
Motala
correctly holds that where an order is made without
jurisdiction, or where there has not been proper citation, another
court
may refuse to enforce it. Again, it is the
court
that is entitled to act, not the party.
[157]
Provincial Government North West v Tsoga Developers CC
[2016]
ZACC 9
;
2016 (5) BCLR 687
(CC) (
Tsoga
) at para 50.
[158]
While “a whole host of reasons” were advanced before
Mabuse J regarding the validity of the extension, he declined
to set
the extension aside.
[159]
In
Clipsal Australia (Pty) Ltd v Gap Distributors
[2009]
ZASCA 49
; 2010 (2) 289 (SCA) at para 21, the Supreme Court of Appeal
explained this position as follows:
“[T]he outcome of the review application is irrelevant to the
question of whether the respondents were acting in contempt
of court
. . . That court order is a final order and has to be obeyed
even if it is wrong as is alleged by the respondents.
Should
the review application be successful and the registration of the
design be set aside, the interdict would come to an end
as there
would no longer be a registered design, but until that happens the
interdict stands and has to be obeyed.”
[160]
In
S v Nel
[1990] ZASCA 145
;
1991 (1) SA 730
(A) at 733A-E, the Court noted
that a person convicted of contempt is not an “ordinary
criminal in the everyday meaning
of the word and he ought not to be
treated as such”. The purpose of considering meting out
punishment in these cases—
“is to enforce the court’s authority . . . The extent of
the punishment stays in the background; in the foreground
is the
esteem and authority of the court . . . The authority of the court
is too precious to attempt to measure it against any
punishment for
any conduct which harms it. Esteem for the court cannot be
achieved by heavier punishments for insults to
the court.”
[161]
Allpay Consolidated Investment Holdings (Pty) Ltd v Chief
Executive Officer, South African Social Security Agency (No 2)
[2014] ZACC 12
;
2014 (4) SA 179
(CC);
2014 (6) BCLR 641
(CC) (
Allpay
II
) at para 42.
[162]
Id;
Mvumvu v Minister for Transport
[2011] ZACC 1
;
2011 (2)
SA 473
(CC);
2011 (5) BCLR 488
(CC) at paras 46 and 48;
Fose v
Minister of Safety and Security
[1997] ZACC 6
;
1997 (3) SA 786
(CC);
1997 (7) BCLR 851
(CC) at para 69.
[163]
Allpay II
above n 161 at para 59.
[164]
Id at para 32: “in the context of public-procurement matters
generally, priority should be given to the public good.”
[165]
Id at para 33.
[166]
SCA judgment above n 13 at para 38.
[167]
Hughes J judgment above n 9 at para 111.
[168]
Second judgment [147].
[169]
Second judgment [148].
[170]
Second judgment [149].
[171]
Economic Freedom Fighters
above n 51.
[172]
This is part of paragraph 74 of the
Economic Freedom Fighters
judgment above n 51 as quoted in [149] of the second judgment.
[173]
See
Economic Freedom Fighters
above n 51 at para 73.
[174]
Id at para 75.
[175]
Id at para 99.
[176]
66 of 1995.
[177]
Sidumo v Rustenburg Platinum Mines Ltd
[2007] ZACC 22; 2008
(2) SA 24 (CC); 2008 (2) BCLR 158 (CC).
[178]
Section 158(1)(c) of the LRA reads: “make any arbitration
award or any settlement agreement an order of Court.”
[179]
Maphango v Aengus Lifestyle Properties (Pty) Ltd
[2012] ZACC
2
;
2012 (3) SA 531
(CC);
2012 (5) BCLR 449
(CC). My minority
judgment in
Maphango
was the first judgment I wrote as an
Acting Justice of this Court.
[180]
Id at para 136.
[181]
Bel Porto School Governing Body v Premier, Western Cape
[2002]
ZACC 2
;
2002 (3) SA 265
(CC);
2002 (9) BCLR 891
(CC) (
Bel Porto
).
[182]
Id at para 115.
[183]
See
Maphango
above n 179 at para 136.
[184]
KwaZulu-Natal Joint Liaison Committee v MEC Department of
Education, KwaZulu-Natal
[2013] ZACC 10; 2013 (4) SA 262 (CC);
2013 (6) BCLR 615 (CC).
[185]
Id at para 160.
[186]
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC) at para 39;
Phillips
v National Director of Public Prosecutions
[2005] ZACC 15
;
2006
(1) SA 505
(CC);
2006 (2) BCLR 274
(CC) at paras 39 and 43;
Bel
Porto
above n 181 at paras 115-9;
Carmichele
v Minister of Safety and Security
[2001]
ZACC 22
;
2001 (4) SA 938
(CC);
2001 (10) BCLR 995
(CC) at para 31;
Prince v President, Cape Law Society
[2000] ZACC 1
;
2001 (2) SA 388
(CC);
2001 (2) BCLR 133
(CC) at para 22.
[187]
Doctors for Life International v Speaker of the National Assembly
[2006] ZACC 11; 2006 (6) SA 416 (CC); 2006 (12) BCLR 1399 (CC).
[188]
Merafong Demarcation Forum v President of the Republic of South
Africa
[2008] ZACC 10; 2008 (5) SA 171 (CC); 2008 (10) BCLR 968
(CC).
[189]
And more recently the same has happened in relation to
Khumalo
above n 59: see
Merafong
n 1 at para 42.
[190]
Merafong
above n 1 at para 42;
Kirland
above n 17 at
paras 101-3;
Welkom
above n 90 at paras 168-265.
[191]
See second judgment [145].
[192]
Turnbull-Jackson v Hibiscus Court Municipality
[2014] ZACC
24
;
2014 (6) SA 592
(CC);
2014 (11) BCLR 1310
(CC) at para 57.
[193]
Economic Freedom Fighters
above n 51.
[194]
See second judgment [147].
[195]
See second judgment [149].
[196]
See
Economic Freedom Fighters
above n 51 at para 33.
[197]
See
Maphango
above n 179.
[198]
See
KwaZulu-Natal Joint Liaison Committee
above n 184.
[199]
Maphango
above n 179 at paras 148-58 and
KwaZulu-Natal
Joint Liaison Committee
above n 184 at paras 79-108.