Department of Transport and Others v Tasima (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Bosielo AJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Nkabinde J and Zondo J
• Judgment Date: 09 November 2016
• Citation: 2017 (2) SA 622 (CC)
• Docket Number: 5/16 [2016] ZACC 39
• Hearing Date: 24 May 2016
• Court: Constitutional Court
• Counsel: JJ Gauntlett SC (with D Unterhalter SC, J Motepe SC, M du Plessis and F Pelser) for the applicants. A Franklin SC (with J McNally SC and A Rowan) for the respondent.

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 in Tasima would be handed down together on 24 October 2016. As a result of that understanding the scribe in the minority I

Jafta J

A 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, B 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.

Judgment

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. D 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 E terms of which a fixed-term agreement for provision of services by Tasima (Pty) Ltd (Tasima) was extended for five years, allegedly in breach of s 217 of the Constitution [3] and s 38 of the Public Finance Management Act (PFMA). [4] Tasima sought and obtained orders from the High Court of South Africa, Gauteng Division, Pretoria (the High Court), which enforced that decision. In some of those orders, officials F 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 G purportedly made by the director-general. As a result a contract that

Jafta J

carried the price of R355 million ended up costing the Department more A than double that amount.

Parties

[5] The applicants are the Department, its current director-general, the Minister of Transport, the Road Traffic Management Corporation B (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 C

[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 D licensing of all vehicles in this country, learner drivers and drivers' licences, 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 E 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 F 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 G 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 H 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 I 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 J

Jafta J

A 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 B 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 C 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 D 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 E 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.

F [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 G 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 H 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, I 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 J invited so that the interim arrangement could be terminated.

Jafta J

[16] In his response the deputy director-general stated: A

'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.com at cost. Attracting and retaining staff is essential for the service guarantee. A new contractor will only maintain the current B system, why advertise. [It is in] the best interest of eNaTIS and [the] new shareholders to re-new the current contract [in] 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 C 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 D...