How sita died

On How sita died. On appeal from the Supreme Court of Appeal the following order is made: 1. Leave to appeal is granted.

2. The appeal is upheld in part.
3. The order of the High Court of South Africa, Gauteng Division, Pretoria is set aside, and replaced with the following: (a) The applicant’s decision to appoint the respondent as a DSS service provider under a contract which was to be effective from 1 April 2012 to 31 July 2012 and all decisions in terms of which the contract was extended from time to time are declared constitutionally invalid. (b) The order of constitutional invalidity in paragraph 3(a) does not have the effect of divesting the respondent of any rights it would have been entitled to under the contract, but for the declaration of invalidity.
4. The applicant must pay the respondent’s costs, including costs of two counsel, in the High Court, the Supreme Court of Appeal and in this Court.

JUDGMENT

MADLANGA J AND PRETORIUS AJ (Mogoeng CJ, Nkabinde ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Mhlantla J, Mojapelo AJ and Zondo J concurring):

Introduction

[1] By what means may an organ of state seek the review and setting aside of its own decision? May it invoke the Promotion of Administrative Justice Act 1 (PAJA)? Or, is the appropriate route legality review? These are the questions that must be determined in this matter. An answer given by a majority of the

3 of 2000.

[5] As a result of this, Gijima instituted an urgent application against SITA in the High Court of South Africa, Gauteng Division, Pretoria (High Court) on 1 February 2012. SITA and Gijima entered into a settlement agreement on 6 February 2012. This agreement was intended to compensate Gijima for the loss of approximately R20 million that it would have suffered as a result of SITA’s termination of the SAPS agreement. The settlement agreement was not made an order of court. The urgent application was then removed from the court roll.

[6] In terms of the settlement agreement Gijima was appointed as the DSS 2 service provider for the KwaZulu-Natal Health Department from 1 March 2012 to 31 July 2012 and for the Department of Defence (DoD) from 1 April 2012 to 31 July 2012 on SITA’s standard terms applicable to agreements of that nature. It was agreed that SITA would comply with all its internal procurement procedures in respect of these two agreements. Throughout, Gijima was concerned whether SITA had complied properly with its procurement processes. SITA assured Gijima that it had the authority to enter into the settlement agreement. It inserted the following term into the DoD services agreement (DoD agreement) at the insistence of Gijima:

“SITA unconditionally warrants, undertakes and guarantees that it has taken all steps necessary to ensure compliance to any relevant legislation governing the award of the Services to the Service Provider and specifically towards ensuring that this Agreement is entirely valid and enforceable, including but not limited to the Public Finance Management Act 1 of 1999. Indemnifies the Service Provider against any loss it may suffer should this warranty be infringed.”

[7] After entering into the settlement agreement, protracted negotiations took place between the parties. At a meeting at which the DoD agreement was concluded, SITA’s former executive for supply chain management once more allayed Gijima’s fears by giving the assurance that SITA’s executive committee had the power to authorise agreements up to an amount of R50 million. 2 This is an unexplained tag given in the contract.

[8] The DoD agreement was extended by addenda on several occasions, namely on 20 September 2012, 21 December 2012 and then, for the last time, on 8 April 2013. On 30 May 2013 SITA informed Gijima that it did not intend to renew the DoD agreement any further.

[9] A payment dispute arose. As at 30 May 2013 SITA allegedly owed Gijima an amount of R9 545 942. When the dispute could not be resolved, Gijima instituted arbitration proceedings in September 2013. SITA resisted the claim on the basis that the DoD agreement, as well as the three extending addenda that followed it, were invalid as there was non-compliance with the provisions of section 217 of the Constitution when the parties concluded the agreement. SITA was adopting this stance for the first time as it had always assured Gijima that all relevant procurement processes had been complied with. SITA also argued that Gijima had not performed in terms of the DoD agreement and the three addenda. On 20 March 2014 the arbitrator issued an award. He held that he did not have jurisdiction to adjudicate the question whether proper procurement processes had been followed.

[10] SITA approached the High Court to set aside the DoD agreement and the three addenda. The High Court held that the decision to award and renew the DoD agreement qualified as administrative action in terms of the provisions of PAJA. 3 It further held that the review had been brought way out of the 180-day period stipulated in section 7(1) of PAJA 4 and that SITA had not sought an extension of this period. 5 3 State Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd [2015] ZAGPPHC 1079 ( High Court judgment ) at para 19. 4 Section 7(1) provides: “Any proceedings for judicial review in terms of section 6(1) must be instituted without unreasonable delay and not later than 180 days after the date— (a) subject to subsection (2)(c), on which any proceedings instituted in terms of internal remedies as contemplated in subsection (2)(a) have been concluded; or (b) when no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons.”

section 7(2) of the Constitution 13 for a court to deny an applicant its right to attack the constitutionality of an agreement simply because it opted for an attack based on the principle of legality and not on PAJA. 14

[13] In this Court, SITA contended that PAJA does not apply. It argued that the conclusion of the agreement did not constitute administrative action as it did not adversely affect Gijima’s rights; on the contrary, the decision to award the DoD agreement had benefited Gijima. SITA further contended that, even if PAJA did apply, the 180-day rule contained in section 7 of PAJA d id not apply to organs of state seeking the review of their own decisions. On this, SITA submitted that none of the dates from which – in terms of section 7(1) – the 180-day period is computed could possibly apply to an organ of state seeking the review and setting aside of its own decision. SITA further submitted that no explanation for the delay was needed.

[14] SITA maintained that there is nothing in the Constitution nor PAJA suggesting that the right to lawful administrative action is exercisable by an organ of state by itself and against itself. Put differently, it is inconceivable that an organ of state can assert the right to lawful administrative action against itself, but then complain to itself that it has violated its own right to lawful administrative action and seek to invoke PAJA against itself. By way of illustration and with reference to section 5 of PAJA, 15 SITA argued that it is difficult to comprehend how an organ of state can request from itself reasons for its own action.

[15] Gijima contended that the central question is whether an organ of state, seeking to set aside its own administrative decision, is required to explain its delay in

13 Section 7(2) provides: “The state must respect, protect, promote and fulfil the rights in the Bill of Rights.” 14 SCA judgment above n 7 at para 55. 15 Section 5(1) provides: “Any person whose rights have been materially and adversely affected by administrative action and who has not been given reasons for the action may, within 90 days after the date on which that person became aware of the action or might reasonably have been expected to have become aware of the action, request that the administrator concerned furnish written reasons for the action.”

instituting review proceedings either under PAJA or under the principle of legality. It asserted that there was no explanation as to how and when SITA became aware of the alleged invalidity of the agreement and the reason for the inordinate delay.

[16] Gijima argued that PAJA applies in the present circumstances as SITA’s decision to award the contract to it had the capacity to affect its rights. If, for instance, one considers the matter from the angle of a person that – as a result of non-compliance with proper procurement procedures – was denied the opportunity to submit a bid, the rights of that would-be competitor would be adversely affected. From that perspective, the award of the DoD agreement would certainly be administrative action. On this, Gijima contended that it is untenable for SITA to suggest that the award of the DoD agreement would be or not be administrative action, depending on the identity of the person complaining about it. In providing specificity on its rights that would be affected, Gijima pointed to the fact that SITA prompted it to settle its claim against SITA arising from the unlawful termination of the SAPS agreement. Further, Gijima submitted that the language of section 6 of PAJA was wide enough to permit even an approach to a court or tribunal by an organ of state for the review of its own decision.

Jurisdiction and leave to appeal

[17] This matter raises an important constitutional issue relating to the proper interpretation and application of PAJA. The question whether PAJA applies when an organ of state seeks to review its own conduct has not yet been decided by this Court. It is a question of some import. There are reasonable prospects of success. The interests of justice dictate that the question be finally and authoritatively determined by this Court. Leave to appeal must thus be granted.

Does PAJA apply?

[18] The answer to this question must surely turn on an interpretation of the Constitution and PAJA. In this regard, the most relevant section of the Constitution is

drafting of regional instruments such as the European Convention on Human Rights and Fundamental Freedoms in 1951, the European Social Charter in 1961, the American Convention on Human Rights in 1969 and the Banjul Charter on Human and Peoples’ Rights in 1981. These developments in the international sphere were mirrored in various national constitutions, many of which now contain bills of rights.” 19 (Emphasis added.)

[20] When the interim Constitution 20 was adopted, the preamble characterised what is known as the Constitutional Principles (CPs) as a solemn pact in the following terms:

“AND WHEREAS in order to secure the achievement of this goal, elected representatives of all the people of South Africa should be mandated to adopt a new Constitution in accordance with a solemn pact recorded as Constitutional Principles.”

[21] It is out of CP II that the Bill of Rights was born. That principle read:

“Everyone shall enjoy all universally accepted fundamental rights, freedoms and civil liberties, which shall be provided for and protected by entrenched and justiciable provisions in the Constitution, which shall be drafted after having given due consideration to inter alia the fundamental rights contained in Chapter 3 of this Constitution.”

[22] In the First Certification Judgment the Court explained that, in using “fundamental rights, freedoms and civil liberties”, “[w]hat the drafters had in mind were those rights and freedoms recognised in open and democratic societies as being the inalienable entitlements of human beings ”. 21 As to what those rights are, there is – as this Court put it – “no finite list”; “[e]ven among democratic societies what is recognised as fundamental rights and freedoms varies in both subject and formulation

19 Ex parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa, 1996 [1996] ZACC 26; 1996 (4) SA 744 (CC); 1996 (10) BCLR 1253 (CC) ( First Certification Judgment ) at fn 46. 20 Act 200 of 1993. 21 First Certification Judgment above n 19 at para 50. Again the emphasis is ours.

from country to country, from constitution to constitution, and from time to time”. 22 But what is the significance of the drafters’ use of “universally accepted” in relation to “fundamental rights, freedoms and civil liberties”? The Court explains:

“Although a strict literal interpretation should not be given to ‘universal’, for that may result in giving little content to CP II, it nevertheless establishes a strict test. It is clear that the drafters intended that only those rights that have gained a wide measure of international acceptance as fundamental human rights must necessarily be included in the [new text of the Constitution]. Beyond that prescription, the [Constitutional Assembly] enjoys a discretion.” 23

[23] Part of what was at issue in the First Certification Judgment were contentions by some that the proposed new text of the Constitution went too far or did not go far enough. 24 The Court clarified the position thus:

“The ‘universally accepted fundamental rights, freedoms and civil liberties’ required by the CP is a narrower group of rights than that entrenched by the [interim Constitution]. We emphasise this point because in several instances objectors argued that [Chapter 2 of the new text of the Constitution] should fail certification because the scope of a particular [provision of the new text] falls short of

• or goes further than – the corresponding provision in the [interim Constitution]. That is not the test. Although it is true that the drafters of the CPs also drafted [Chapter 3 of the interim Constitution] and had its provisions in mind in plotting the guidelines for the [Constitutional Assembly], they expressly did not bind it to draft a bill of rights identical to that in the [interim Constitution]. To the extent that the [interim Constitution] afforded rights which went beyond the ‘universally accepted’ norm, the [Constitutional Assembly] was entitled to reduce them to that measure. By like token, the [Constitutional Assembly] was entitled to formulate rights more generously than would be required by the ‘universally accepted’ norm, or even to establish new rights. It should be emphasised that in general the Bill of Rights

22

Id. 23 Id at para 51. 24 Id at para 52.

[26] So obnoxious and unjust was South Africa’s administrative law that Corder says it “ha[d] [deservedly] been called a ‘dismal science’”. 30 All this explains the need for a significant overhaul of South Africa’s administrative law. Needless to say, the intended beneficiaries of the change were private persons (natural and juristic). The State was to be the bearer of any obligations brought about by the innovation. In this context, we can conceive of no reason why an organ of state seeking to review its own decision could ever have been meant also to be a beneficiary. After all, it was the conduct of organs of state that had necessitated the change.

[27] Does section 33 of the Constitution, which is at the centre of the innovation, shed a different light to that gleaned from this background? This section is primarily concerned with “everyone’s” right to procedurally fair, reasonable and lawful administrative action. Is “everyone” in this section so wide as to extend to the State? We think not. 31 Section 33(3)(b) provides that national legislation, which – in terms of section 33(3) – has to give effect to the section 33 rights, must impose a duty on the State to give effect to the rights in section 33(1) and (2). It seems inconsonant that the State can be both the beneficiary of the rights and the bearer of the corresponding obligation that is intended to give effect to the rights. This must, indeed, be an indication that only private persons enjoy rights under section 33.

[28] Let us look more closely at the rights themselves. We have mentioned the one created by section 33(1), which is the right to lawful, reasonable and procedurally fair administrative action. If the State holds this right, who is the correlative duty-bearer? Put differently, from whom would an organ of state whose own decision is the subject of its concern expect this lawful, reasonable and procedurally fair administrative action? From itself? That simply cannot be. Section 33(2) affords a person whose rights have been adversely affected by administrative action a right to be given written reasons. Surely, it could never have been the object of the section that an organ of state should – like private persons – also enjoy a right to be furnished, by itself, 30 Corder “Introduction: Administrative Law Reform” (1993) Acta Juridica 1 at 1. (Footnote omitted.) 31 What we express here should be viewed in the light of what we say in [2].

written reasons for administrative action taken by itself. What purpose would a right of that nature serve? None whatsoever.

[29] In the end, we a re fortified in the conclusion that section 33 of the Constitution creates rights enjoyed only by private persons. And the bearer of obligations under the section is the State.

[30] Given this interpretation of section 33 of the Constitution, does the language of section 6 of PAJA extend to an organ of state seeking the review of its own administrative action? In answering this question, a fact that should be paramount is that PAJA is legislation that was enacted pursuant to the provisions of section 33(3) of the Constitution to give effect to the rights contained in section 33(1) and (2) of the Constitution. 32 PAJA must therefore be interpreted through the prism of section 33 of the Constitution.

[31] Section 6(1) of PAJA provides that “[a]ny person may institute proceedings in a court or tribunal for the judicial review of an administrative action”. Section 6(2) then itemises the grounds on which a court or tribunal may undertake this review. When decreeing – in section 33(3) – that national legislation must be enacted to, inter alia , “provide for the review of administrative action”, the reference to “administrative action” in this section must surely be a reference to the earlier “administrative action” referred to in section 33(1) and (2). The Constitution thus envisages that – in making provision for the review of administrative action – the national legislation must direct itself to the administrative action referred to in section 33(1) and (2). We have already concluded that the right to administrative action that is lawful, reasonable and procedurally fair (section 33(1)) and the right of everyone whose rights have been adversely affected to be given written reasons (section 33(2)) are enjoyed by private persons, not organs of state. Therefore, when

32 Minister of Health v New Clicks South Africa (Pty) Ltd [2005] ZACC 14; 2006 (2) SA 311 (CC); 2006 (1) BCLR 1 (CC) at paras 95 and 433 and Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism [2004] ZACC 15; 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) at para 25.

administrator is entitled to seek an extension of the period within which to bring a review under section 6. And it may only do so if, in the first place, it is entitled to launch a review under section 6.

[34] This argument is without merit. Context is important. In section 5(2) the administrator is required to give reasons within 90 days of receipt of a request. In terms of section 7 a person must lodge an application for review within 180 days of the stipulated date. When section 9 says “the period of 90 days or 180 days referred to in sections 5 and 7 may be extended for a fixed period… on application by the person or administrator concerned”, all it means is that the 90-day period applicable to the administrator may be extended on application by the administrator and the 180-day period applicable to the person seeking review in terms of section 6 may be extended on application by that person. We now know who enjoys the right to bring review proceedings under section 6.

[35] In sum, SITA ought not to have been non-suited on the basis of the time limit in section 7 of PAJA because PAJA does not apply to the review of its own decision.

[36] The majority judgment in the Supreme Court of Appeal suggests that an approach that says, in circumstances as we have here, PAJA is not available to organs of state as a vehicle for review may make it easy for them to escape accountability. 36 Indeed, Gijima asserted that SITA simply wished to avoid the provisions of PAJA. The Supreme Court of Appeal, relying on Kirland , 37 held that there was no “justification for permitting the State, with all the resources at its disposal, not to be subjected to the exacting requirements of PAJA in the way that all

by a court or tribunal on application by the person or administrator concerned. (2) The court or tribunal may grant an application in terms of subsection (1) where the interests of justice so require.” 36 SCA judgment above n 7 at para 30. 37 MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd t/a Eye and Lazer Institute [2014] ZACC 6; 2014 (3) SA 481 (CC); 2014 (5) BCLR 547 (CC) ( Kirland ).

other litigants are”. 38 In Kirland , the organ of state concerned had taken a decision that overturned its earlier decision. It averred that it had done so because the earlier decision was vitiated by impropriety. Of importance, it had taken a conscious decision not to seek the review and setting aside of the earlier decision because that decision had been taken well over the 180-day time limit for instituting review proceedings provided for in section 7 of PAJA. 39 Obviously, it had adopted this stance because it was under the impression that a review of the earlier decision would have had to be under PAJA. Thus it was not an issue in Kirland whether PAJA applies to an organ of state seeking to have its own decision reviewed. So, Kirland is distinguishable and cannot provide an answer to the issue at hand.

[37] The Supreme Court of Appeal also makes the point that no sane applicant would submit to PAJA’s definition of administrative action or to the strict procedural requirements of section 7 if he or she had a choice and that, as a result, PAJA would soon become redundant. 40 We do not agree. The point of the matter is that no choice is available to an organ of state wanting to have its own decision reviewed; PAJA is simply not available to it. That is the conclusion we have been led to by an interpretation of, primarily, section 33 of the Constitution and, secondarily, PAJA itself. Thus there is no basis for suggesting that an organ of state seeking a review of its own decision may simply choose to avoid review under PAJA for reasons of expediency.

Review under legality

[38] The conclusion that PAJA does not apply does not mean that an organ of state cannot apply for the review of its own decision; it simply means that it cannot do so under PAJA. In Fedsure this Court said that “[i]t seems central to the conception of our constitutional order that the Legislature and Executive in every sphere are

38 SCA judgment above n 7 at para 16. 39 See Kirland above n 37 at para 83. 40 SCA judgment above n 7 at para 36.

Affordable Medicines Trust the principle of legality was referred to as a constitutional control of the exercise of public power. Ngcobo J put it thus:

“The exercise of public power must therefore comply with the Constitution, which is the supreme law, and the doctrine of legality, which is part of that law. The doctrine of legality, which is an incident of the rule of law, is one of the constitutional controls through which the exercise of public power is regulated by the Constitution.” 45

[40] What we glean from this is that the exercise of public power which is at variance with the principle of legality is inconsistent with the Constitution itself. In short, it is invalid. That is a consequence of what section 2 of the Constitution stipulates. 46 Relating all this to the matter before us, the award of the DoD agreement was an exercise of public power. The principle of legality may thus be a vehicle for its review. The question is: did the award conform to legal prescripts? If it did, that is the end of the matter. If it did not, it may be reviewed and possibly set aside under legality review.

[41] It was not in dispute that the award of the DoD agreement by SITA was not pursuant to a competitive bidding process. Neither party produced evidence to show that, despite not following a competitive process, the process followed complied with the relevant public procurement prescripts. Section 217 of the Constitution insists on a system of public procurement that complies with certain factors. It provides that “[w]hen an organ of state… contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost- effective”. It therefore seems reasonable for this Court to infer that, in awarding the contract, SITA acted contrary to the dictates of the Constitution. Based on Fedsure , this was at odds with the principle of legality and liable to be reviewed and possibly set aside. Indeed, we have previously held that the principle of legality would be a

(c) Supremacy of the Constitution and the rule of law.” 45 Affordable Medicines Trust v Minister of Health [2005] ZACC 3; 2006 (3) SA 247 (CC); 2005 (6) BCLR 529 (CC) at para 49. 46 Section 2 of the Constitution provides that the 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”.

means by which an organ of state may seek the review of its own decision. This was in Khumalo. 47

[42] SITA delayed by just under 22 months before approaching the High Court for review. What impact, if any, should this delay have?

Delay

[43] Relying on section 237 of the Constitution, 48 Skweyiya J held in Khumalo :

“Section 237 acknowledges the significance of timeous compliance with constitutional prescripts. It 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.” 49 (Footnotes omitted.)

[44] The reason for requiring reviews to be instituted without undue delay is thus to ensure certainty and promote legality: time is of utmost importance. In Merafong Cameron J said:

“The rule against delay in instituting review exists for good reason: to curb the potential prejudice that would ensue if the lawfulness of the decision remains

47 Khumalo v Member of the Executive Council for Education: KwaZulu Natal [2013] ZACC 49; 2014 (5) SA 579 (CC); 2014 (3) BCLR (CC). 48 This section provides: “All constitutional obligations must be performed diligently and without delay.” 49 Khumalo above n 47 at paras 46 -8.