Transnet Ltd v Goodman Brothers (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Hefer ADCJ, Harms JA, Olivier JA, Schutz JA and Mthiyane AJA
• Judgment Date: 09 November 2000
• Docket Number: 373/98
• Hearing Date: 19 September 2000
• Counsel: I A M Semenya SC (with him I V Maleka) for the appellant. T Price for the respondent.
• Court: Supreme Court of Appeal

Olivier JA: E

[1] The judgment of the Court a quo which is the subject-matter of this appeal has been reported as Goodman Bros (Pty) Ltd v Transnet Ltd 1998 (4) SA 989 (W). That judgment was the last in a series of three judgments, all concerning the appellant, and all raising similar and difficult issues of constitutional importance. A divergence of opinion has emerged from F these judgments. The two other judgments are ABBM Printing & Publishing (Pty) Ltd v Transnet Ltd 1998 (2) SA 109 (W), also at 1997 (10) BCLR 1429 (ABBM; references are to the judgment as reported in the SA Law Reports), and SA Metal Machinery Co Ltd v Transnet Ltd, an unreported judgment of the Witwatersrand Local Division, case No 30 825/97, delivered on 22 March 1998 ('SA Metal'). G

[2] The appellant (Transnet) observes the old custom of rewarding its long-serving employees with expensive watches. Jewellers and suppliers of watches are invited biennially to submit tenders for the supply of suitable watches. Since 1994 the respondent (Goodman) H had supplied Transnet with these watches pursuant to successful tenders awarded to it. That Transnet had no cause for complaint in respect of the performance by Goodman of its obligations is not disputed.

[3] On 26 August 1997 Transnet issued a written invitation to interested parties to tender for the supply of such watches to one of its business units, Spoornet, for a period of two years, commencing I on 1 January 1998 and terminating on 31 December 1999.

[4] Apart from the conditions of tender (whose significance I address below), the written invitation to tender provided specifications of the wrist watches sought. J

Olivier JA

[5] The respondent and six other tenderers submitted their A written tenders timeously.

[6] The tender was awarded by Transnet's tender board to F Bacher & Co (Pty) Ltd (Bacher), which undertook to supply Pierre Cardin wrist watches.

[7] In January 1998 Goodman, acting through its attorney, B addressed a letter to Transnet, pointing out that for four years it had supplied Spoornet with watches and requesting Transnet to furnish it with the reasons for its decision to grant the tender to Bacher and also with a comprehensive list of documents relating to the tender and the procedure followed by Transnet in awarding the tender. C

[8] The letter requesting the said reasons and documentation sets out the basis of the entitlement relied upon by Goodman. The relevant parts read as follows:

'2. Our client wishes to establish that the tender procedure, the process of tender adjudication, and the outcome of such adjudication, D has not infringed our client's rights or legitimate expectation that the Transnet Tender Board and its functionaries would fairly, responsibly and honestly consider all tenders submitted and would properly apply its mind in arriving at a decision regarding the award of the tenders.

3.1 In terms of s 33 of the Constitution of the Republic of South Africa Act 108 of 1996 (''the Constitution'') our client is E entitled to administrative action that is ''lawful, reasonable and procedurally fair''.

3.2 Transnet is clearly an organ of State as defined in the Constitution since it is a functionary or institution ''exercising a public power or performing a public function in terms of any legislation''.

3.3 The Transnet Tender Board and other persons involved in the Tender adjudication process exercised administrative powers on behalf F of an organ of State, namely Transnet.

3.4 It is accordingly our client's contention that the process of consideration of tenders constitutes administrative action and that our client is therefore entitled to all information it may reasonably require to establish whether or not its right to lawful administrative action has been violated.

4. The administrative actions by the Transnet Tender Board, which is G an administrative body, has adversely affected our client's rights and our client is accordingly entitled in terms of s 33(2) of the Constitution to written reasons for the decisions of the Tender Board and hereby asks for the same.'

[9] To this request, Mr D A Dludlu, the chairman of the H Transnet Tender Board, replied in a letter dated 3 February 1998:

'4 I further wish to let you know that it is not the policy of Transnet to provide reasons for its decisions to unsuccessful tenderers (see the provision of clause 10(a) of the conditions of tender (form US 7) that your client has agreed to be bound by).'

[10] Clause 10(a) of the conditions of tender, to I which Mr Dludlu referred, reads as follows:

'The company does not bind itself to accept the lowest or any tender/quotation nor will it assign any reason for the rejection of a tender/quotation.'

[11] Apparently to make doubly sure that Transnet's attitude was not misunderstood, the following letter was written on a letterhead of J

Olivier JA

Transnet by the chief executive of Promat, a division of Transnet, A on 4 February 1998 and delivered to Goodman's attorney:

'Herewith acknowledgment of your correspondence. As the purchasing support business unit of Transnet, Promat concurs with the views expressed by the chairman of the Tender Board, correspondence dated 3 February 1998. In addition, kindly note that Transnet is in control of its own destiny hence it reserves the right to award business, within the ambit of the highest standards of ethical code, to B whom it deems appropriate. The company is under no obligation to furnish reasons for non-award.'

(My correction.)

[12] Thereafter Goodman launched the application now under consideration. Repeating its allegations that it was entitled, by C virtue of the provisions of ss 33 and/or 217 of the Constitution to relief against Transnet, it claimed orders in the following terms:

'1.

Declaring that the words ''nor will it assign any reason for the rejection of a tender/quotation'' contained in the respondent's document styled ''General Condition of Promat Tenders, Contracts and Orders'' to be in conflict with the provisions of s 33 and/or s 217 D of the Constitution of the Republic of South Africa Act 108 of 1996 and declaring further that the provision containing those words is to that extent invalid.

2.

Ordering the respondent to provide the applicant with written reasons for the rejection of the applicant's tender for the E supply and delivery of wrist-watches to the respondent in terms of tender No 1080 97276, such reasons to be provided within the time period stipulated by this honourable Court.

3.

Directing the respondent to provide to the applicant within the time period stipulated by this honourable Court with the following: F

3.1

Copies of all tenders received by the respondent in response to tender enquiry No 1080 97276.

3.2

A schedule setting out the dates upon which each and every tender was received by the respondent.

3.3

Copies of all documentation relating to the establishment and G operation of the respondent's tender board.

3.4

Full details in writing detailing how the members of the respondent's tender board are selected, how the tender board is constituted and the procedures to be followed by the tender board in adjudicating upon and selecting tenders. H

3.5

Copies of all reports, minutes and other documentation of whatever nature received by the respondent's tender board which were submitted in response to tender enquiry No 1080 97276.

3.6

Copies of all contracts concluded by the respondent with any successful party or parties in response to tender enquiry No I 1080 97276.

3.7

Copies of all brochures and all technical specifications received by the respondent in respect of the wristwatches which were included in the successful tender under tender No 1080 97276. J

Olivier JA

4.

Directing that the respondent shall pay the costs of this A application on the attorney and client scale.'

[13] This application was met with an opposing affidavit by one Leon Raath, the chief executive of Promat, on behalf of Transnet. This affidavit raised the following points:

(i)

the other tenderers should have been joined in the proceedings; B

(ii)

Transnet is not an organ of State, subject to administrative scrutiny;

(iii)

in calling for and awarding the tenders now under consideration, Transnet did not perform an administrative act;

(iv)

Goodman has no right, interest or legitimate expectation to C be protected, but that even if it had such a right, interest or expectation, this has not been threatened by Transnet in any way;

(v)

that clause 10(a) of the tender conditions amounts to a waiver of any right that Goodman might have had to be furnished with the reasons requested by it. D

[14] The matter came before Blieden J. He granted prayers 1 and 2 of the application, with costs. He refused prayer 3, ie that the documents requested by Goodman be delivered to it. The learned Judge later granted Transnet leave to appeal to this Court against paras 1 and 2 of his order, as well as the costs order. There is no E cross-appeal by Goodman against the refusal by Blieden J of the said prayer 3. The correctness of such refusal is, therefore, not in issue in this Court.

[15] In its application Goodman relied on certain constitutional grounds for the relief claimed, and it also sought to F question the award of the tender to the successful tenderer on the factual ground that the watches to be supplied by the latter did not meet the written specifications set out in the invitation to tender. The Court a quo rejected the latter ground of attack, and there is no cross-appeal against that decision. Nothing more needs to be said concerning this aspect.

[16] The two remaining issues before us are therefore: G

(a)

whether Goodman was entitled to the...