Transnet Ltd v Goodman Brothers (Pty) Ltd

• Jurisdiction: South Africa

Transnet Ltd v Goodman Brothers (Pty) Ltd
2001 (1) SA 853 (SCA)

2001 (1) SA p853

Citation	2001 (1) SA 853 (SCA)
Case No	373/98
Court	Supreme Court of Appeal
Judge	Hefer ADCJ, Harms JA, Olivier JA, Schutz JA and Mthiyane AJA
Heard	September 19, 2000
Judgment	November 9, 2000
Counsel	I A M Semenya SC (with him I V Maleka) for the appellant.; T Price for the respondent.

Flynote : Sleutelwoorde B

Constitutional law — Human rights — Right to administrative justice in terms of s 33 of Constitution of the Republic of South Africa Act 108 of 1996 read with item 23(2)(b) of Schedule 6 to Constitution — Right of person to be furnished with reasons for administrative action affecting his or her rights or interests — Award of tender for purchase of goods by recently privatised State-owned C limited company charged with performance of general service to public — Whether unsuccessful tenderer entitled to reasons for rejection of its tender — State having ultimate control over company — In providing general service to public, company performing public function and exercising public powers — That company no longer part of State irrelevant — Steps preceding award of tender purely administrative D actions and tender contemplating purchase incidental to company's general powers — Tender procedure constituting 'administrative action' — Unsuccessful tenderer also having required 'right' or 'interest' in sense of right to information reasonably required to determine whether right to lawful administrative action violated — Without reasons, company deprived of opportunity to consider E further action and accordingly such right also 'affected' by conduct of company — Company obliged to furnish reasons for decision.

Headnote : Kopnota

The respondent had unsuccessfully tendered to supply F wristwatches to the appellant (Transnet). The respondent, relying on s 33 of the Constitution of the Republic of South Africa Act 108 of 1996 read with item 23(2)(c) of Schedule 6 to the Constitution, had approached a Local Division for an order declaring, inter alia, that the part of the tender conditions that provided that Transnet would not 'assign any reason for the rejection of a tender/quotation' was unconstitutional and that Transnet was G obliged to furnish reasons for rejection of the respondent's tender. Transnet opposed the application, inter alia on the grounds that it was not an 'organ of State' as intended in s 217 of the Constitution and that its act of awarding the tender had not been an administrative act. The application was granted and Transnet launched the present appeal to the Supreme Court of Appeal. The question raised on appeal was essentially whether Transnet, a limited company wholly H owned by the State, had been obliged to supply the respondent with reasons as to why another tenderer had been preferred. Item 23(2)(c) of Schedule 6 to the Constitution provided that '(e)very person has the right to . . . be furnished with reasons in writing for administrative action which affects any of their rights or interests unless the reasons for that action have been made public'. I

Held (per Schutz JA; Hefer ADCJ, Harms JA and Mthiyane AJA concurring), that three issues had to be considered in order to determine whether item 23(2)(b) entitled the respondent to reasons: (1) whether the tender procedure amounted to 'administrative action'; (2) whether the respondent had a 'right' or 'interest'; and (3) if he had, whether the right or interest had been 'affected'. (Paragraph [4] of Schutz JA's judgment at 869F - G.) J

2001 (1) SA p854

Held, further, that, although it was not necessary to resort A to s 39 of the Constitution, which enjoined courts interpreting the Bill of Rights in doing so to promote the values underlying an 'open' and democratic society based on human dignity, equality and freedom, it was nevertheless clear that an 'open . . . society' would not countenance the type of secrecy in the tender process that Transnet contended was permitted by the Constitution. (Paragraph [6] of Schutz JA's judgment at 870C/D - D. ) B

Held, further, as to (1), that the reasoning employed in Umfolozi Transport Bpk v Minister van Vervoer en Andere [1997] 2 B All SA 548 (SCA), where it was held that the State Tender Board's handling of tenders for government transport services constituted administrative action and pointed out that the steps that had preceded the conclusion of the contract were purely administrative actions and decisions by officials, and that public money had been C spent by a public body in the public interest, applied also to Transnet in the instant case. The fact that Transnet had become a limited company was of no consequence: the government owned all its shares and thus had ultimate control. Even though Transnet was now competition- and profit-oriented, it still provided a general service to the public. (Paragraphs [7] and [8] of Schutz JA's judgment at 870D - G.) D

Held, further, that Transnet's attempt to draw a distinction between its administrative actions (such as an invitation for tenders to supply locomotives) and non-administrative actions (such as an invitation to supply tenders for watches) could not be upheld. The purchase of watches was clearly incidental to the exercise of Transnet's general powers. They were bought to be used to secure the E loyalty of employees, much as salaries were paid to secure their services. Accordingly Transnet's actions in calling for and adjudicating tenders constituted administrative action, whatever contractual arrangements might have been attendant upon them. (Paragraph [9] of Schutz JA's judgment at 871A - B/C.)

Held, further, as to (2), that, as stated in Aquafund (Pty) Ltd v Premier of the Province of the Western Cape 1997 (7) F BCLR 907 (C), the 'right' of someone in the position of the respondent consisted in its right to obtain the information which it reasonably required in order to enable it to determine whether its right to lawful administrative action provided for in the Constitution had been violated. (Paragraph [10] of Schutz JA's judgment at 871D/E - E/F.)

Held, further, that another valid approach was that the G tenderer had the right to lawful and procedurally fair administrative action provided for in paras (a) and (b) of item 23(2). The rejection of a tender affected those rights, which were protected by para (c). (Paragraph [11] of Schutz JA's judgment at 871F - F/G.)

Held, further, as to (3), that because the first two questions had been settled adversely to Transnet, there could be no H question that the respondent's rights had been 'affected'. Without reasons the respondent was deprived of the opportunity, to which it was entitled, to consider further action. (Paragraph [12] of Schutz JA's judgment at 871G - H.)

Held, further, that it was not necessary to deal with s 217 of the Constitution, and accordingly not necessary to decide whether Transnet was an 'organ of State'. (Paragraph [14] of Schutz JA's I judgment at 871I.) Appeal dismissed.

Olivier JA handed down a separate concurring judgment in which he agreed that the tender process amounted to 'administrative action' and that the respondent was thus entitled to the protection afforded by s 33 of the Constitution, bearing in mind in particular that Transnet, generally speaking, exercised the public powers and performed the public functions of a government department (para [38] of Olivier JA's judgment at 866I); that J

2001 (1) SA p855

the specific power exercised had not been confined to the internal affairs of Transnet inasmuch as A public funds and ultimately State responsibility were involved (para [39] of Olivier JA's judgment at 867B); and, moreover, that the right to be furnished with reasons for an administrative decision was the bulwark of the right to just administrative action (para [42] of Olivier JA's judgment at 867F/G - G).

The decision in the Witwatersrand Local Division in Goodman Bros B (Pty) Ltd v Transnet Ltd 1998 (4) SA 989 confirmed.

Cases Considered

Annotations:

Reported cases

ABBM Printing and Publishing (Pty) Ltd v Transnet Ltd 1998 (2) SA 109 (W) (1997 (10) BCLR 1429): considered C

Administrator, Natal, and Another v Sibiya and Another 1992 (4) SA 532 (A): referred to

Administrator, Transvaal, and Others v Zenzile and Others 1991 (1) SA 21 (A): referred to

Aquafund (Pty) Ltd v Premier of the Province of the Western Cape 1997 (7) BCLR 907 (C): dictum at 913I applied D

Claude Neon Ltd v Germiston City Council and Another 1995 (3) SA 710 (W): referred to

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA 374 (CC): referred to

Fundstrust (Pty) Ltd (in Liquidation) v Van Deventer 1997 (1) SA 710 (A): referred to E

Ernst & Young and Others v Beinash and Others 1999 (1) SA 1114 (W): referred to

Goodman Bros (Pty) Ltd v Transnet Ltd 1998 (4) SA 989 (W): confirmed on appeal

Jeeva and Others v Receiver of Revenue, Port Elizabeth, and Others 1995 (2) SA 433 (SE): referred to F

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

President of the Republic of South Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1 (CC) (1999 (10) BCLR 1059): distinguished G

Toerien en 'n Ander v De Villiers NO en 'n Ander 1995 (2) SA 879 (C): referred to

Umfolozi Transport (Edms) Bpk v Minister van Vervoer en Andere [1997] 2 B All SA 548 (SCA): dictum at 552j - 553a approved and applied.

Statutes Considered

Statutes H

The Constitution of the Republic of South Africa Act 108 of 1996, ss 33, 39, 217, Schedule 6 item 23(2): see Juta's Statutes of South Africa 1999 vol 5 at 1 - 150, 1 - 152, 1 - 180...