Calibre Clinical Consultants (Pty) Ltd and Another v National Bargaining Council for the Road Freight Industry and Another

• Jurisdiction: South Africa
• Judge: Nugent JA, Lewis JA, Ponnan JA, Cachalia JA and Leach JA
• Judgment Date: 19 July 2010
• Citation: 2010 (5) SA 457 (SCA)
• Docket Number: 410/09
• Hearing Date: 07 May 2010
• Counsel: B Leech for the appellants. PJ Pretorius SC (with LH Barnes) for the first respondent. No appearance for the second respondent.
• Court: Supreme Court of Appeal

Nugent JA:

[1] The first respondent - the Bargaining Council for the Road Freight Industry - is a bargaining council established under the enabling provisions of s 27 of the Labour Relations Act 66 of 1995 (LRA). Wishing to C appoint a service provider to manage one of its projects, the council invited interested parties to submit proposals for its consideration. Proposals were submitted by, among others, a partnership [1] comprising Thebe Ya Bophela Healthcare Administrators (Pty) Ltd (Thebe) and Calibre Clinical Consultants (Pty) Ltd (the latter is the first appellant), [2] to which I shall refer as the partnership, and by a consortium (the second D appellant) comprising Right to Care Ltd and the remaining appellants, to which I shall refer as the consortium.

[2] After considering the various proposals the council decided not to appoint any of those who had submitted proposals. Instead it asked the E auditing firm KPMG to assist it to identify an appropriate service provider. Two candidates were identified, one of which was the second respondent, HIV Managed Care Solutions (Pty) Ltd (it trades under the name Careworks and I will refer to it as such), which the council appointed.

[3] Aggrieved by the decisions of the council, the appellants [3] applied to F the High Court at Johannesburg to review and set them aside, [4] relying upon the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Their application was dismissed by Willis J. This appeal against his order is before us with the leave of this court.

[4] It is convenient at the outset to outline the nature of a bargaining G council. Section 27(1) of the LRA allows for one or more registered trade unions and one or more registered employers' organisations to establish a bargaining council for a particular industry and area. The parties do so by adopting a constitution and having the bargaining council registered. A bargaining council exists primarily as a forum for collective bargaining H between the parties. Generally the parties will conclude collective agreements from time to time, which become binding on them and on their members. In certain circumstances the Minister may extend the

Nugent JA

A terms of a collective agreement to third parties in the industry by a declaration to that effect published in the Government Gazette. A bargaining council has various statutory powers to enforce the terms of its collective agreements.

[5] In addition to serving as a forum for collective bargaining, a B bargaining council might also undertake other functions directed at maintaining industrial harmony and promoting the welfare of employees in the industry. In particular, a bargaining council is empowered by the LRA - powers that are replicated in the constitution of the council in this case - to 'promote and establish training and education schemes' [5] and to C 'establish and administer pension, provident, medical aid, sick pay, holiday, unemployment and training schemes or funds or any similar schemes or funds for the benefit of one or more of the parties to the bargaining council or their members'. [6]

[6] The material facts in this case are lucidly set out in the judgment of D the court below, but some repetition is necessary to explain in more detail how this matter arose. The council's concern for the impact of the HIV/AIDS pandemic on employees in the road-freight industry led it to establish an awareness programme that it called 'Trucking Against AIDS'. In about 2007 the parties to the council agreed to extend that programme by establishing what it called a 'wellness fund' that would, E among other things, introduce and maintain a programme to provide antiretroviral treatment to employees in the industry. Their agreement to establish the fund, and the terms upon which it was to function, were recorded in a clause that was inserted into the existing collective agreement. The collective agreement had been extended to the industry generally by declaration of the Minister in the Gazette and the amendment F was similarly extended.

[7] The fund was to be financed from compulsory contributions levied upon employers and employees. It was agreed that the fund would be under the control of what was referred to in the evidence as a 'Wellness G Committee' (called an 'AIDS committee' in the agreement) and it was agreed that the committee 'may contract with service providers for the provision of services, facilities, publications, support, training, counselling, presentations and all other forms of services necessary for the implementation and continuance of the plan'.

H [8] The council needed an appropriate service provider to manage and administer the programme. In about July 2007 it invited selected parties to submit proposals for the provision of such a service. The service that was required encompassed the coordination of an antiretroviral-management programme, the provision of education and training, the provision of a counselling service, the procurement of pharmaceuticals, and the I establishment of a drug-distribution service. A poor response to its invitations prompted the council later to advertise the invitation more generally.

Nugent JA

[9] Written proposals were submitted by, among others, the partnership A and the consortium. In September 2007 the various proposers were invited to present their proposals to an interview panel. On 5 October 2007 the council wrote to the consortium, congratulating it on its presentation, and advising that the panel had decided in principle that the consortium should be appointed, but that a due-diligence review was still required. It was told that once that had been completed the panel B would 'put together a recommendation to the Council for final adjudication'.

[10] The council instructed a firm of auditors, SizweNtsaluba VSP, to perform what was described as a 'limited financial due diligence review' C of the various bidders 'for the sole purpose of assisting the [council] in assessing the appropriateness of the bidders as the designated Wellness Program Service Provider'. SizweNtsaluba duly performed the review and submitted a substantial report dated 6 December 2007.

[11] In its report SizweNtsaluba raised certain concerns that it said D 'might require further discussion and consideration' before the council selected the bidder concerned. So far as the partnership was concerned, it was reported, amongst other things, that Thebe was insolvent (its liabilities exceeded its assets by R130 556). So far as the consortium was concerned, two concerns were expressed: E

'The [Right to Care] consortium is heavily reliant on a single individual who will be in charge of coordinating the project with no clear indication of succession planning regarding the replacement of this person should it prove necessary.'

(The person concerned was Dr Grietjie Strydom, who was the sole employee of one of the members of the consortium.) F

'[Right to Care] is heavily reliant on income from a single source, namely USAID. The income is reliant on dependencies that are not under the control of [Right to Care].'

[12] After considering the report the council requested SizweNtsaluba to G 'engage with the bidders and report back' on the steps taken by the various bidders to address the concerns that had been expressed. SizweNtsaluba raised its concerns with the partnership and with the consortium. The partnership responded in a further presentation that it made to SizweNtsaluba and also submitted further documents, while the consortium responded in writing. H

[13] On 18 February 2008 SizweNtsaluba submitted a further report to the council in which it provided a summary of the responses it had received. As far as the insolvency of Thebe was concerned, it reported Thebe's response as follows:

'There is a [memorandum of understanding] in place between [Thebe I Investment Corporation][7] and [Thebe] whereby [Thebe Investment Corporation] has subordinated its claims against [Thebe] for the

Nugent JA

A benefit of other creditors. In the letter from [Thebe Investment Corporation] to [the council] (dated 6 September 2007) it was stated that [Thebe Investment Corporation] regards the provision of affordable healthcare as a core component of their financial services strategy and are fully committed to establishing [Thebe] as a major player in the healthcare industry. As a result, [Thebe Investment Corporation] will B continue to provide full financial backing to [Thebe] to enable [Thebe] to meet its objectives.'

As for the two concerns raised in relation to the consortium, the response was reported as follows:

C 'RTC has stated that as the primary partner in the contract with [the council], RTC will take full responsibility for the implementation of the project. Dr Grietjie Strydom will increase her capacity in the organisation to meet the needs of [the council].

RTC has stated that it is expanding its interventions and programmes into the private sector and is broadening the funding base across the D organisation, thereby further diversifying the funding of its revenue.'

[14] On 27 February 2008 the Wellness Committee met to consider the reports. Meanwhile a further concern had arisen. On the previous day the council received a letter from Alexander Forbes Financial Services (Pty) Ltd. The council was informed that Dr Grietjie Strydom had E formerly been employed by Alexander Forbes, and was subject to a restraint agreement that precluded her from providing AIDS intervention programmes and from dealing with clients or potential clients of Alexander Forbes until November 2009. The council sent a copy of the letter to the consortium. Dr Strydom's response was that she had been advised by her attorneys that the restraint was not enforceable. The F council also sought the advice of its...