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Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others

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Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others

Case name: Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others

Citation: [2023] ZASCA 98

Court: Supreme Court of Appeal of South Africa

Date of Judgement: 14th June 2023

Introduction to the Matter

This matter was on appeal from the Gauteng Division of the High Court, Pretoria.

It concerned the awarding of a tender by the government; such procurement being heavily governed by constitutional and legislative provisions; the core provision being section 217 of the Constitution of the Republic of South Africa.

Overview of the Matter

In this matter, the third appellant, the Department of International Relations and Co-operation, had awarded a tender to a Joint Venture formed by the first and second respondents in May 2016. 

In the tender bidding process, both bidding consortiums had failed to provide audited financial statements for the companies making said consortium. However, while one consortium was disqualified for this reason, the other (Joint Venture) was permitted to proceed. 

On the recommendation of the Bid Evaluation Committee (BEC) and the Bid Adjudication Committee (BAC), the Director-General awarded the tender to the Joint Venture. 

The Requests for Proposal (RFP’s) did make it clear that the bidders for the award would have to finance the construction of the project themselves, with the Department taking the position of a lessee, possibly with the view of purchasing on termination of the lease. 

As such, the Department would not be making any capital outlay in the project.

A steering committee was created to monitor the implementation of the project, including members of the Joint Venture, the Department, and the National Treasury. 

At the steering committee’s first meeting, the Joint Venture had made an offer for the purchase of land and it was agreed that the Department would consider contributing towards the purchase. It was stated that Simeka Group, a member of the Joint Venture, would act as the Department’s agent in purchasing the land, with the South African Government, now effectively becoming the purchaser of the land. 

At that point, the court noted, and, it was envisaged, that the Department would finance both the acquisition of the land, and the construction of the office and residential accommodation. 

This was considered a drastic change from what had been originally envisioned when the RFP’s for the project had been made. 

The Department then made an application to the National Treasury regarding the project’s approval, as required by legislation. 

However, at the same time it was revealed that Regiments Capital, a member of the Joint Venture, was associated with a family suspected of defrauding the South African government. This information resulted in the National Treasury being reluctant to grant approval on the project.

Although proposals were made to try to remedy the situation, the Treasury refused to grant approval, and in a bid to free itself, the Department consulted the State Attorney. 

The State Attorney promptly wrote to the respondent’s attorneys, saying that the award process had many material defects. They continued by stating that a review application would be made to the High Court to have the tender award declared unconstitutional and unlawful.

The Supreme Court of Appeal South Africa

The Supreme Court of Appeal South Africa

In the High Court, the Department, its Minister and Director-General sought an order declaring the tender award unconstitutional and unlawful, allowing for the award to be reviewed and consequently set aside, due to many material irregularities in the award process. 

This review application took over two years to be made though.

The question considered in the judgement was whether the tender awarded to the Joint Venture, was constitutionally sound.
The judgement further considered whether the Department had unacceptably delayed in instituting their legality review.

The High Court held that the government parties had made far too large a delay in instituting review proceedings, without suitable explanations for said delay, dismissing their application, without considering the merits of the case.

Leave to appeal to the Supreme Court of Appeal was subsequently granted.

Summary of the Judgement

The Department did reference in their argument that the tender bidders had not been treated equally, and the Joint Venture had been unfairly preferred. Also, finally, once the tender award had been granted, the Department had solely funded the project when it was supposed to have been the sole responsibility of the Joint Venture.

In regards to their delay in instituting review, it was argued: 

  • firstly, that there was no delay, but any delay was adequately explained and reasonable, and,
  • that the High Court’s decision in coming to the opposite conclusion was based on a misunderstanding of facts, and finally, 
  • that the unlawfulness seen in the tender award and PPA, should have allowed for the delay to have been overlooked.

Accordingly, this case required the Supreme Court of Appeal (SCA) to determine 

Firstly, whether or not there was any non-compliance with the requirements of the RFPs, and if so, whether or not such irregularities with the tender requirements were material to render the award unconstitutional. 

Secondly, the court had to determine if the Appellants had made an unreasonable delay in making their review application, and whether or not the delay should have been condoned. 

Regarding the Merits of The Case

The SCA first analysed the discrepancies relating to the merits of the review.

Section 217 of the Constitution requires that when an organ of state contracts for goods or services, it must do so in a system that is transparent, equal and fair, as well as competitive and cost-effective. 

This dictates that any tender awarded is done so in the same manner.

The SCA held that there was no argument that the matter was not in line with section 217 of the Constitution. The BEC and BAC had both failed in their Constitutional and legislative duties. 

This led to the question as to whether or not the Department acted unconstitutionally. By allowing the one consortium to continue but not the other, and preferring the Joint Venture over the competitor, had it not, in fact, failed to meet the requirements for transparency, equality and fairness? 

The SCA found that there was no argument for the Joint Venture not to have supplied the required financial statements. 

Not supplying those documents would be contrary to section 217 of the Constitution, which seeks to ensure that any state procurement is done in a manner that is fair, equitable and transparent. 

Regarding the Joint Venture’s ability to raise the required funding for the project by themselves, and prove as much; (which was required by clause 7.1.6 of the RFPs) by way of supplying a letter from a financial institution of their ability to do so; the SCA held that the letter provided for Simeka Group did not disclose that the Joint Venture had the capability to raise nor provide the funds for the project. This meant that the RFPs had not been fulfilled.

The SCA further held that from the evidence before them, nothing was suggesting that the review had been brought by the Department for ulterior motives.

Therefore, they held that the Joint Venture could not provide what the Department desired and required. They said that the irregularities argued by the government in these proceedings, did exist, and were material.

This meant that the contract entered into between the Joint Venture and the Department, had to be unconstitutional and unlawful as a result.

Delay 

In explaining the delay, the appellants suggested that since the National Treasury had alleged that the tender award had been irregular, it had been necessary for the BEC members to be consulted. This was a time-consuming task, as many members were on international diplomatic missions. 

Following this consultation, the Department responded to the National Treasury’s queries although it was only in the next year that the National Treasury would restate that it would not approve the project. 

Additionally, the review application and preparation for such was time consuming, having a great amount of documentation to be collated, drafted and reviewed. 

The SCA held that:

  • with these contributing factors one should bear in mind how bureaucratic machinery is known for a slow and inefficient pace.
  • with regards to the matter of the delay, the review was not subject to the time limits as set in section 7(1) of Promotion of Administrative Justice Act 3 of 2000 (PAJA), as since it was the Department seeking to invalidate its own decision, this review was sought in terms of the principle of legality. 
  • there was a long existing rule that reviews should be instituted as soon as possible, to prevent respondents from possible prejudice caused by delay, and because there is a public interest element in seeing administrative decisions finalised.
  • they saw fit to distinguish between reasonable delay and condonation where a delay was unreasonable. 

They held that the reasonableness of the delay is based on the facts and circumstances related to the specific case, while judicial discretion is used to determine if an unreasonable delay is to be permitted and condoned, or not. 

  • they also noted that for an Appeal Court to interfere with the decision of the High Court to find the delay unreasonable, it must be certain that the High Court did not exercise its discretion judicially, or that it exercised discretion based on a wrong appreciation of facts or on wrong principles of law.
  • the High Court had failed to exercise its discretion judicially; or in the alternative, did so based on a wrong appreciation of facts or principles of law. 
  • where a delay was not considered unreasonable, this would suggest overlooking the delay and allowing a court to look at the merits of the case. This implied that where a delay was unreasonable it should perhaps still be overlooked based on the merits and circumstances of the case.
  • there was no argument that the government was late in this matter, but held that the High Court had not properly considered the interests of justice, the deviations from the tender requirements, together with the financial implications of revising the tender requirements in choosing not to condone the unreasonable delay. 
  • while they felt that certain aspects of the Department’s explanation were lacking, the SCA were of the opinion that the strong prospects for the Department had not been considered. 
  • they raised the issues of the financial burden that will be suffered by the Department due to the deviations in the tender requirement. 
  • together with the financial benefits that will be gained by Simeka Group in response, it should be remembered that the tender was made with the idea that the Joint Venture would bear the costs, and not the Department. 
  • they concluded that due to the amount of reasons, and the high stakes involved, the delay should be condoned and the merits of the case examined.

The appeal was therefore upheld and the tender award declared unconstitutional and unlawful.

Analysis of the Judgement

This case therefore details the importance of compliance in supplying the required information when applying for not only a tender award, but any contract. 

Being unable to do so would likely lead to a failure to contract appropriately, and as seen in this case, could lead to a matter being declared unconstitutional and as a result, unlawful.

This is similar to the case of Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others, where the Constitutional Court emphasised the importance of the procedures being followed, in that it allows for fairness in the bidding process, leads to a more efficient result and prevents corruption.

This case further deals with the appeals of review. 

While an appeal court cannot ordinarily intervene for no reason, with a review:

An appeal court may appeal a matter dismissed by a trial court where it is of the opinion that the trial court did not exercise its discretion judiciously. 

If the appeal court is of the opinion that the trial court made its decision on wrong application of facts, or on mistakes in principles of law, as has been previously stated in the case of Biowatch Trust v Registrar Genetic Resources and Others.

The last key point of this case is focused on how courts handle delays. 

When receiving such an application, a court must determine if the delay is reasonable or not, and if not, then determine if that unreasonable delay should be overlooked. 

According to this case, factors that would allow for a case to be heard even after an unreasonable delay, are where there are high stakes involved, the delayed party has a high likelihood of success based on merits, and if it would be in the interests of justice to hear the merits. 

A lesson from this case is that when a party brings an application for review forward, they should attempt to avoid any delay, remembering that while a delay may be permitted, this permission will only be granted if the facts and circumstances of the case warrant such. 

This is in line with the cases of Aurecon South Africa (Pty) Ltd v City of Cape Town, Valor IT v Premier, North West Province and Others and Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd. 

Additionally, while a self-review might be dismissed solely due to an unreasonable and uncondoned delay, it is more likely that the delay will be condoned if it is in the interests of justice, or if the merits suggest a greater chance of success.

Interestingly, this current case suggests that the merits and circumstances of a case are what are used to determine if a case is unreasonably delayed, as well as if a case should be condoned in line with judicial discretion, in the event that the delay was found to be unreasonable, which suggests that the merits of a case must be analysed regardless. 

This case could therefore be contrasted with the case of Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd, where an application was refused by the SCA, with a delay being unreasonable and prejudicing the respondents, while the little non-compliance there was, not being sufficient to have the process and contracts set aside.

Conclusion

It is important to supply the required information when applying for a tender award, so that the project envisioned can begin and continue as originally intended at the time. 

With deviation from the requirements and process and without providing the necessary information, it becomes difficult, if not impossible to carry out the project as desired, leading to further complications, should the project continue at all. 

This further heavily deals with the matter of review. 

While an Appeal Court cannot ordinarily intervene with a review, it may appeal a matter dismissed by a trial court where it is of the opinion that the trial court did not exercise its discretion judiciously, or where it is of the opinion that the trial court made its decision on erroneous application of facts, or on mistakes in principles of law.

When dealing with delays, a court must determine if such a delay is reasonable or not based on the circumstances and merits of the specific case. If it is the latter, then determine if that unreasonable delay should be overlooked, using judicial discretion. 

Factors that would allow for a case to be heard even after an unreasonable delay, are where there are high stakes involved, the delayed party has a high likelihood of success based on merits, and if it would be in the interests of justice to hear the merits.

Citation

Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others (610/2021) [2023] ZASCA 98 (14 June 2023)

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