Steenkamp NO v Provincial Tender Board, Eastern Cape

• Jurisdiction: South Africa
• Citation: 2007 (3) SA 121 (CC)

Steenkamp NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121 (CC)

2007 (3) SA p121

Citation	2007 (3) SA 121 (CC)
Case No	CCT 71/05
Court	Constitutional Court
Judge	Langa CJ, Moseneke DCJ, Madala J, Mokgoro J, Nkabinde J, O'Regan J, Sachs J, Skweyiya J, Van Der Westhuizen J and Yacoob J
Heard	May 11, 2006
Judgment	September 28, 2006
Counsel	P B J Farlam for the applicant.; R G Buchanan SC and S V Notshe SC for the respondents.

Flynote : Sleutelwoorde G

Delict — Pure economic loss — Loss suffered by initially successful tenderer as result of negligent H but bona fide award of contract — Out-of-pocket expenses — Constitution, 1996, and Provincial Tender Board Act (Eastern Cape) 2 of 1994 — Claim for damages in delict — Whether conduct of tender board wrongful or unlawful in sense that it could give rise to Aquilian liability. I

Delict — Breach of statutory duty — Improper performance of administrative action — Tender board making negligent but bona fide award of tender in breach of statutory duty — Award subsequently set aside on review — Initially successful tenderer claiming damages in delict in respect of out-of-pocket expenses incurred consequent upon award — In evaluating J

2007 (3) SA p122

tenders, tender board owing no legal duty to tenderers in statute, at common law, or on constitutional A principles — Improper award not wrongful — Initially successful tenderer having no delictual claim against board.

Headnote : Kopnota

The applicant was liquidator of a company to which the respondent had awarded a tender to supply certain government B services. The award was subsequently set aside on review on the ground that it had been made negligently. The applicant then claimed damages in delict from the respondent in respect of its out-of-pocket expenses incurred consequent upon the award of the tender. The wrongfulness of the respondent's award, it contended, consisted in the breach by the respondent of the duty of care owed by the C respondent to the applicant in evaluating and awarding the tender. The Supreme Court of Appeal held that the applicant had no cause of action because the respondent had not, as a matter of public policy, acted wrongfully, ie it declined to develop the common law to allow the applicant to recover damages in delict for pure economic loss sustained as a result of a negligent but bona fide award of a tender. D

In an application for leave to appeal and on appeal to the Constitutional Court the applicant contended: (1) that the invitation and consideration of tenders by the respondent was an administrative function; (2) that the respondent owed the applicant a legal duty to ensure that the tender process was administratively just; (3) that the respondent had breached its duty to the applicant and violated the applicable constitutional principles when it E negligently but bona fide awarded the tender to the applicant; and (4) that in the circumstances the common law ought to be developed to hold the respondent liable to the applicant for damages in delict.

Held, that an administrative act that breached a statutory duty was necessarily wrongful in the delictual sense only where there was a legal duty to prevent the loss to the plaintiff, and that such a duty existed only where called for by policy considerations of fairness F and reasonableness. (Paragraphs [37] and [39] at 137D - E and 138D.)

Held, further, that the empowering constitutional provisions and the governing statute neither granted nor implied the grant of a right of action for damages in delict to the initially successful tenderer flowing from an improper but bona fide award of the tender. (Paragraph [47] at 141F.) G

Held, further, that the initially successful tenderer had other remedies: it could tender again or could negotiate the recovery of its out-of-pocket expenses from the tender board. (Paragraphs [48] - [51] at 142C - 143B.)

Held, further, that there was no justification for developing the common law to embrace a claim for damages in delict by the initially successful tenderer since: (1) it had been established H that an unsuccessful tenderer who incurred a financial loss had no remedy in delict and there was no reason to distinguish between his position and the position of the initially successful tenderer who incurred out-of-pocket expenses, ie the common law should not be developed to grant the latter a remedy in delict where the former had none; and (2) there was no need to grant the initially successful tenderer a remedy in delict, as the out-of-pocket loss could be avoided and it could also re-tender. (Paragraph [54] at 143F - H.) I

Held, further, that there were thus no public policy considerations and no constitutional values which justified adapting or extending the common law of delict to recognise a right of action by an initially successful tenderer who had incurred financial loss on the strength of the award which was subsequently set aside on review. (Paragraph [56] at 144H.) J

2007 (3) SA p123

Held, further, that the respondent had not owed the applicant a duty of care: (i) public policy considerations required A that adjudicators of competing tenders be immune from damages claims in respect of their negligent but honest decisions; (ii) the legislation governing tender boards was aimed primarily at protecting the public B interest, as opposed to the interest of individuals or groups; (iii) imposing delictual liability on the negligent performance of functions of tender boards would open the gate to claims by initially successful tenderers whose claims were subsequently set aside by court order, which would ultimately be to the detriment of the public at large. (Paragraph [55] at 143I - 144F.)

Held, accordingly, that since the respondent had not owed the applicant a duty of care, its conduct in awarding the tender was not wrongful. (Paragraph [56] at 144G.) Appeal dismissed. C

Cases Considered

Annotations

Reported cases

Southern African cases

Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A): referred to D

Affordable Medicines Trust and Others v Minister of Health and Others 2006 (3) SA 247 (CC) (2005 (6) BCLR 529): referred to

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

Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA) (2001 E (10) BCLR 1026): referred to

Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal Studies Intervening) 2001 (4) SA 938 (CC) (2002 (1) SACR 79; 2001 (10) BCLR 995; [2000] 4 All SA 537): referred to

Cash Paymaster Services (Pty) Ltd v Eastern Cape Province and Others 1999 (1) SA 324 (Ck) ([1997] 4 All SA 363): referred to F

De Freitas and Another v Society of Advocates of Natal (Natal Law Society Intervening) 1998 (11) BCLR 1345 (CC): referred to

Du Plessis v Road Accident Fund 2004 (1) SA 359 (SCA) (2003 (11) BCLR 1220): referred to

Fose v Minister of Safety and Security 1997 (3) SA 786 (CC) (1997 (7) BCLR 851): referred to G

Fraser v Naude and Others 1999 (1) SA 1 (CC) (1998 (11) BCLR 1357): referred to

Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) ([2004] 4 All SA 500): referred to

Grey's Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others 2005 (6) SA 313 (SCA) (2005 (10) BCLR 931; [2005] 3 All SA 33): referred to H

Ingledew v Financial Services Board: In re Financial Services Board v Van der Merwe and Another 2003 (4) SA 584 (CC) (2003 (8) BCLR 825): referred to

Kaunda and Others v President of the Republic of South Africa and Others 2005 (4) SA 235 (CC) (2004 (10) BCLR 1009): referred to I

Knop v Johannesburg City Council 1995 (2) SA 1 (A): referred to

Kruger v Coetzee 1966 (2) SA 428 (A): referred to

Lascon Properties (Pty) Ltd v Wadeville Investment Co (Pty) Ltd and Another 1997 (4) SA 578 (W) ([1997] 3 All SA 433): referred to

Local Transitional Council of Delmas and Another v Boshoff 2005 (5) SA 514 (SCA) ([2005] 4 All SA 175): referred to J

2007 (3) SA p124

Logbro Properties CC v Bedderson NO and Others 2003 (2) SA 460 (SCA) ([2003] 1 All SA 424): referred to A

Member of the Executive Council for Development Planning and Local Government, Gauteng v Democratic Party and Others 1998 (4) SA 1157 (CC) (1998 (7) BCLR 855): referred to

M G Holmes (Pty) Ltd v National Transport Commission and Another 1951 (4) SA 659 (T): distinguished B

Minister of Finance and Others v Gore NO 2007 (1) SA 111 (SCA): referred to

Minister of Health and Another NO v New Clicks South Africa (Pty) Ltd and Others (Treatment Action Campaign and Another as Amici Curiae) 2006 (2) SA 311 (CC) (2006 (1) BCLR 1): referred to

Minister of Law and Order v Kadir 1995 (1) SA 303 (A): referred to C

Minister of Safety and Security v Hamilton 2004 (2) SA 216 (SCA) ([2003] 4 All SA 117): referred to

Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) ([2002] 3 All SA 741): referred to

Mkhatswa v Minister of Defence 2000 (1) SA 1104 (SCA) ([2000] 1 All SA 188): referred to D

National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (2) SA 1 (CC) (2000 (1) BCLR 39): referred to

National Education Health and Allied Workers Union v University of Cape Town and Others 2003 (3) SA 1 (CC) (2003 (2) BCLR 154): referred to

Olitzki Property Holdings v State Tender Board and Another 2001 (3) SA 1247 (SCA) (2001 (8) BCLR 779): applied E

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

Premier, Western Cape v Faircape Property Developers (Pty) Ltd 2003 (6) SA 13 (SCA) ([2003]...