Road Traffic Management Corporation v Waymark Infotech (Pty) Ltd

• Jurisdiction: South Africa

Road Traffic Management Corporation v Waymark Infotech (Pty) Ltd
2019 (5) SA 29 (CC)

2019 (5) SA p29

Citation	2019 (5) SA 29 (CC)
Case No	CCT 73/18; [2018] ZACC 12
Court	Constitutional Court
Judge	Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J, Petse AJ and Theron J
Heard	April 2, 2019
Judgment	April 2, 2019
Counsel	NH Maenetje SC (with N Rajab-Budlender and M Finn) for the applicant.; K Tsatsawana SC (with C Marule) for the respondent.

Flynote : Sleutelwoorde

Government procurement — Contract — Information technology services — Duration of three years — Whether contract was 'transaction' involving 'future financial commitment' — Public Finance Management Act 1 of 1999, s 66(3)(c). C

Headnote : Kopnota

Applicant corporation, a national public entity, conducted a lawful tender process and contracted with respondent company (Waymark) for Waymark to provide it, over three financial years, with information technology services (see [2] and [10]). D

The corporation later repudiated the agreement, and Waymark cancelled it and instituted an action for its damages (see [14] – [15]).

The corporation counterclaimed for an order that the agreement was invalid because of non-compliance with s 66(3)(c) of the Public Finance Management Act 1 of 1999 (see [16]). It provides that a national public entity 'may only through the [Minister] . . . enter into any . . . transaction that binds . . . E that public entity to any future financial commitment . . .' (see [7]).

No ministerial approval was obtained before the agreement was concluded (see [10]).

The High Court's finding was that s 66 applied, and the failure to obtain approval resulted in the corporation not being bound by the agreement (see [17] and [19]). F

The Supreme Court of Appeal found, however, that s 66 did not apply and that the corporation was bound by the agreement (see [20]).

In the Constitutional Court, held, that 'future financial commitment' meant a financial commitment beyond the present moment (see [35]); and that 'transaction' was confined to transactions similar to credit or security agreements (see [45]). G

Here, the transaction was a procurement contract and so fell outside s 66 (see [62]). It was thus binding without ministerial approval (see [20]).

Leave to appeal granted but appeal dismissed (see [65]).

Cases cited

Afriforum and Another v University of The Free State 2018 (2) SA 185 (CC) H (2018 (4) BCLR 387; [2017] ZACC 48): dictum in para [43] applied

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 2004 (4) SA 490 (CC) (2004 (7) BCLR 687; [2004] ZACC 15): referred to

Bertie van Zyl (Pty) Ltd and Another v Minister for Safety and Security and Others I 2010 (2) SA 181 (CC) (2009 (10) BCLR 978; [2009] ZACC 11): referred to

Commissioner for Inland Revenue v Ocean Manufacturing Ltd 1990 (3) SA 610 (A): referred to

Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC) (2014 (8) BCLR 869; [2014] ZACC 16): dictum in para [28] applied J

2019 (5) SA p30

Du Toit v Minister for Safety and Security and Another A 2009 (6) SA 128 (CC) (2010 (1) SACR 1; 2009 (12) BCLR 1171; [2009] ZACC 22): referred to

First National Bank of SA Ltd v Rosenblum and Another 2001 (4) SA 189 (SCA) ([2001] 4 All SA 355): referred to

Frank R Thorold (Pty) Ltd v Estate Late Beit 1996 (4) SA 705 (A): referred to B

Genesis Medical Aid Scheme v Registrar, Medical Schemes and Another 2017 (6) SA 1 (CC) (2017 (9) BCLR 1164; [2017] ZACC 16): referred to

Hayne & Co v Kaffrarian Steam Mill Co Ltd 1914 AD 363: dictum at 371 applied

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others C 2001 (1) SA 545 (CC) (2000 (2) SACR 349; 2000 (10) BCLR 1079; [2000] ZACC 12): referred to

Kubyana v Standard Bank of South Africa Ltd 2014 (3) SA 56 (CC) D (2014 (4) BCLR 400; [2014] ZACC 1): referred to

KwaZulu-Natal Joint Liaison Committee v MEC for Education, KwaZulu-Natal and Others 2013 (4) SA 262 (CC) (2013 (6) BCLR 615; [2013] ZACC 10): referred to

Mpofu v Minister for Justice and Constitutional Development 2013 (2) SACR 407 (CC) (2013 (9) BCLR 1072; [2013] ZACC 15): dictum in para [63] applied

Natal Joint Municipal Pension Fund v Endumeni Municipality E 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): applied

Panamo Properties 103 (Pty) Ltd v Land and Agricultural Development Bank of South Africa 2016 (1) SA 202 (SCA) ([2015] ZASCA 70): referred to

Pharmaceutical Manufacturers Association of SA and Another: In re Ex parte President of the Republic of South Africa and Others F 2000 (2) SA 674 (CC) (2000 (3) BCLR 241; [2000] ZACC 1): referred to

Poovalingam v Rajbansi 1992 (1) SA 283 (A): referred to

Pretorius and Another v Transnet Pension Fund and Another (2018) 39 ILJ 1937 (CC) ([2018] 7 BLLR 663; 2018 (7) BCLR 838; [2018] ZACC 10): dictum in para [14] applied

Putco Ltd v Gauteng MEC for Roads and Transport G 2016 JDR 756 (GP): referred to

R v Hugo 1926 AD 268: referred to

Rand Rietfontein Estates Ltd v Cohn 1937 AD 317: dictum at 321 applied

S v Du Plessis 1981 (3) SA 382 (A): referred to

S v Wood 1976 (1) SA 703 (A): referred to

SATAWU and Another v Garvas and Others H 2013 (1) SA 83 (CC) (2012 (8) BCLR 840; [2012] ZACC 13): dictum in para [37] applied

Sea Melody Enterprises SA v Bulktrans (Europe) Corporation: The Merak S 2002 (4) SA 273 (SCA) ([2002] ZASCA 18): referred to

Skotnes v South African Library 1997 (2) SA 770 (SCA): referred to

Snyders and Others v De Jager and Others 2017 (3) SA 545 (CC) (2017 (5) BCLR 614; I [2016] ZACC 550): dictum in para [28] applied

South African Police Service v Public Servants Association 2007 (3) SA 521 (CC) ([2007] 5 BLLR 383; [2006] ZACC 18): referred to

TEB Properties CC v MEC, Department of Health and Social Development, North West [2012] 1 All SA 479 (SCA): referred to

Waymark Infotech (Pty) Ltd v Road Traffic Management Corporation [2016] ZAGPPHC 1027: J referred to

2019 (5) SA p31

Waymark Infotech (Pty) Ltd v Road Traffic Management Corporation 2018 (3) SA 90 (SCA): A upheld on appeal.

Legislation cited

The Public Finance Management Act 1 of 1999, s 66(3)(c): see Juta's Statutes of South Africa 2018/19 vol 3 at 1-520.

Case Information

NH Maenetje SC (with N Rajab-Budlender and M Finn) for the B applicant.

K Tsatsawana SC (with C Marule) for the respondent.

An application for leave to appeal a decision of the Supreme Court of Appeal.

Order C

1.

Leave to appeal is granted.

2.

The appeal is dismissed with costs, including the costs of two counsel.

Judgment

Petse AJ (Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J and Theron J D concurring):

Introduction

[1] The facts in this case are deceptively straightforward, concealing the E complexity and obscurity of the underlying legal issue which requires resolution. Central to the dispute is the proper interpretation of ss 66 and 68 of the Public Finance Management Act [1] (PFMA). At the heart of the dispute are the ambit of these sections and the interplay between them and some of the other sections in the PFMA. [2]

[2] This is an application for leave to appeal against a decision of the F Supreme Court of Appeal. The Supreme Court of Appeal held that a service level agreement between the Road Traffic Management Corporation (RTMC) [3] and Waymark Infotech (Pty) Ltd (Waymark), [4] entered pursuant to a proper procurement process, and with service and payment milestones extending beyond the financial year in which the G agreement was concluded, did not require the prior approval of the Minister of Finance (Minister) under s 66 of the PFMA. Consequently, the RTMC was held to be bound by the agreement, even though the Minister had not approved it.

[3] The RTMC adopts the obdurate stance that it is not bound by the H agreement because it is hit by the prohibition contained in s 68 of the PFMA. It applies for leave to appeal to this court arguing that the agreement rightly

2019 (5) SA p32

Petse AJ (Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J and Theron J concurring)

falls A within s 66's ambit. Thus, it contends that it is not bound by the agreement because, as s 68 of the PFMA decrees, an agreement of the kind at issue in this case is void if not approved by the Minister as required by s 66. Waymark, in opposition, argues that the agreement does not fall within s 66's ambit, so it does not matter that the Minister did not approve the B agreement. Alternatively, it asserts that even if the agreement required ministerial approval, the RTMC is still bound by the agreement unless and until it succeeds in applying to a court for its decision to contract with Waymark to be reviewed and set aside (which it has not done). Waymark also contends, in any event, that it is not in the interests of justice for this court to grant leave to appeal.

[4] C Accordingly, the primary question is one of interpretation: What are the ambit and effect of ss 66 and 68 of the PFMA? More specifically:

(a)

Does the agreement between the RTMC and Waymark fall within the ambit of s 66 of the PFMA?

(b)

If so, because the agreement was not approved by the Minister, was D it then incumbent upon the RTMC to bring review proceedings to have the agreement set aside?

(c)

If review proceedings were necessary, did the RTMC's counterclaim in substance amount to review proceedings, and, if so, can the delay in bringing those review proceedings be condoned?

[5] E This judgment holds against the RTMC on the first question. Briefly, it concludes, as did the Supreme Court of Appeal, that the agreement...