Logbro Properties CC v Bedderson NO and Others

• Jurisdiction: South Africa
• Citation: 2003 (2) SA 460 (SCA)

Logbro Properties CC v Bedderson NO and Others
2003 (2) SA 460 (SCA)

2003 (2) SA p460

Citation	2003 (2) SA 460 (SCA)
Case No	372/2001
Court	Supreme Court of Appeal
Judge	Howie JA, Farlam JA, Cameron JA, Heher JA, Lewis AJA
Heard	August 23, 2002
Judgment	October 18, 2002
Counsel	G J Marcus SC (with him M Daley) for the appellant.; E J B Lingenfelder for the first to fourth respondents.

Flynote : Sleutelwoorde B

Administrative law — Tenders — Tendering process — Fairness of — Constitutional requirements of administrative justice apply to process — Fairness not, however, requiring administrator, in reconsidering decision set aside by Court, to ignore supervening considerations — But affected party entitled to C opportunity to make representations if such considerations may lead to adverse decision.

Provincial government — Provincial tender board — Tendering process — Fairness of — Constitutional requirements of administrative justice apply to process — Tender process constitutes 'administrative action' under Constitution of the Republic of South D Africa Act 108 of 1996, which entitles tenderer to lawful and procedurally fair process and, where its rights are affected or threatened, to outcome which is justifiable in relation to reasons provided for it — Even if conditions of tender constitute contract, they do not exhaust province's duties towards tenderers — Principles of administrative justice continue E to govern that relationship and province, in exercising its contractual rights in tender process, is obliged to act lawfully, procedurally and fairly — In consequence, some of its contractual rights will necessarily yield before its public duties under Constitution and any applicable legislation — This not meaning that tender conditions irrelevant to province's subsequent powers, for they may bear on exact ambit of its duty to act F fairly — Furthermore, in present case, province dictated tender conditions — Province thus 'acting from a position of superiority or authority by virtue of its being a public authority' in specifying those terms — Province therefore burdened with public duties of fairness in exercising powers it derives from terms of contract. G

Provincial government — Provincial tender board — Tendering process — Constitutional requirements of administrative justice apply to process — Tender committee mandated to dispose of public assets in public interest — Award of tender set aside by Court and tender committee ordered to reconsider tenders — In reconsidering award of tender, committee to balance all relevant public interests — This includes interests of tenderer but also includes public benefit to be derived H from obtaining a higher price by re-advertising property — Accordingly, committee acted unimpeachably in recommending that increase in property values justified call for fresh tenders entirely — However, procedural fairness demanded that committee, in reconsidering tenders, afford compliant tenderers opportunity to make representations, at least in writing, on any factor I that might lead committee not to award tender at all — That opportunity not having been afforded, committee's decision set aside, and matter remitted to appropriate authority to afford appellant and other compliant tenderers opportunity to make appropriate representations. J

2003 (2) SA p461

Headnote : Kopnota

In 1997 a High Court ordered a provincial tender committee to reconsider certain tenders that the appellant and others had submitted A in 1995 to buy a certain property. The question raised in the present appeal was whether the committee, in reconsidering the tenders in accordance with the High Court order, had been entitled to take into account supervening considerations, specifically the fact that property values had increased since 1995. The Court a quo held that the committee had been so entitled to take the increase in property B values into account.

In 1995, the KwaZulu-Natal provincial government (the province) awarded a tender for the sale of a property in Richards Bay to one N. The appellant's tender was rejected. The appellant challenged the award on the basis that, although N's tender had been the highest, it had not complied with the tender conditions. The challenge was successful and the High Court set aside the award and ordered the province's assets C committee (the committee) to reconsider the appellant's and other tenders that had complied with the tender conditions. The matter duly came before the committee for reconsideration. Despite the fact that the appellant's tender was then the highest, the committee decided not to accept the appellant's or, indeed, any other of the 1995 tenders. Instead, in view of the increase in Richards Bay property values in the D intervening two years, it recommended a call for fresh tenders entirely. Again, the appellant challenged the committee's decision in a High Court, but this time, unsuccessfully. The Court held that the order directing the committee to reconsider the qualifying tenders required the committee to consider the matter anew, which left it free to take into account new factors and circumstances, including the increase in property values since 1995. E

The appellant appealed against that decision. It did so on the basis that the committee's recommendation constituted improper and unjustified administrative action. It contended that, had the 1995 process been perfect, it would, in all likelihood, have received the benefit of a property acquisition judged against then-market values and that that provided the basis for its claim that, in 1997, the committee F should have ignored the supervening increase in market values. Relying on Mustapha and Another v Receiver of Revenue, Lichtenberg and Others 1958 (3) SA 343 (A) and Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA) counsel for the province contended that the tender conditions, which the province stipulated, gave it a contractual right to withdraw the property from tender in 1997, and that it could do so G 'without having to pass the scrutiny of lawful administrative action'.

It was also contended on behalf of the appellant that, before the committee decided not to award the tender in 1997, it should have given the appellant an opportunity to make representations on the significance of the price increase. H

Held that the tender process constituted 'administrative action' under both the Constitution of the Republic of South Africa Act 200 of 1993 and the Constitution of the Republic of South Africa Act 108 of 1996. This entitled the appellant to a lawful and procedurally fair process and, where its rights were affected or threatened, to an outcome which was justifiable in relation to the reasons provided for it. (Paragraph [5] at 465F - G.) I

Held, further, that, in setting aside the original award of the tender to N, the Court had held that the province's tender offer, accepted by the tenderers, gave rise to a contract whose conditions the tenderers could enforce against the province. However, even if the conditions constituted a contract, its provisions did not exhaust the province's duties towards the tenderers. Principles of administrative justice continued to govern that relationship J

2003 (2) SA p462

and the province, in exercising its contractural rights in the tender process, was obliged A to act lawfully, procedurally and fairly. In consequence, some of its contractural rights would necessarily yield before its public duties under the Constitution and any applicable legislation. (Paragraphs [6] and [7] at 466C/D - D and F - G/H.)

Held, further, that that was not to say that the conditions for which the province stipulated in putting out the tender were irrelevant to its subsequent powers, for they might bear on the exact B ambit of the duty of the province to act fairly. (Paragraph [8] at 466H - 467A.)

Held, further, that, for reasons not only doctrinal but also historical, the province's invocation of Mustapha was inappropriate. It was necessary for the majority judgment in Mustapha to be overruled and for the dissenting judgment of Schreiner JA to be recognised as correct. (Paragraphs [12] and [13] at 468C/D and 469A/B - B.) C

Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA) explained and distinguished.

Held, further, that in the present case the province itself dictated the tender conditions, which constituted a contract once the tenderers agreed to them. The province was thus 'acting from a position of superiority or authority by virtue of its being a public D authority' in specifying those terms. The province was therefore burdened with its public duties of fairness in exercising the powers it derived from the terms of the contract. (Paragraph [11] at 468B - C/D.)

Held, further, that, even if the terms stipulated by the province for the tender process entitled it to withdraw the Richards Bay property, it could exercise that power only with regard to the E principles of administrative justice. It could not withdraw the property capriciously or for an improper or unjustified reason. (Paragraph [14] at 469B - C.)

Held, further, that both in 1995 and in 1997 there were departmental recommendations before the committee that the property be sold to the highest tenderer. That recommendation had the twofold implication that, first, had the committee excluded non-compliant F tenders from consideration in 1995, the appellant's tender would, in all likelihood, have been accepted; and, secondly, had the committee omitted from consideration the increase in property values in 1997, acceptance of the appellant's tender would have been a foregone conclusion. (Paragraph [15] at 469E - F.)

Held...