Case CCT91/17 
[2019] ZACC 15

Hearing Date: 04 September 2018 
Judgement Date:16 April 2019

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Tuesday, 16 April 2019 at 10h00, the Constitutional Court handed down a judgment in an application for leave to appeal against the judgment and order of the Supreme Court of Appeal upholding an appeal against a decision of the High Court of South Africa, Eastern Cape Division, Grahamstown (High Court).  In the High Court, the applicant, the Buffalo City Metropolitan Municipality (Municipality), instituted proceedings seeking an order reviewing and setting aside its decision to award a tender to the respondent, Asla Construction (Pty) Limited (Asla), on the basis of non-compliance with section 217 of the Constitution and the statutory provisions governing procurement.

In 2003, the Municipality recognised the need to address housing shortages in Duncan Village, and specifically in informal settlements in that area, including Reeston.  Asla tendered for and was appointed as an implementing agent on a turnkey basis for a housing project to address the housing needs of Duncan Village.  The Municipality accepted Asla’s tender.  On 30 May 2014, the Municipality and Asla concluded an agreement (the Turnkey Agreement).  The Turnkey Agreement required Asla to provide 3000 housing units for the Duncan Village Development.  In October 2014, the parties concluded a subsequent agreement for the engineering services and construction of housing top structures within Reeston (the Reeston Agreement).  Asla then commenced work under the Reeston Agreement.

A dispute arose between the parties surrounding the conclusion of the Reeston Agreement.  When the Municipality failed to pay Asla for its work under the Reeston Agreement, Asla instituted provisional sentence proceedings against the Municipality.  The Municipality brought a counter-application seeking to review and set aside its decision relating to the Reeston Agreement.  The Municipality contended that there ought to have been a separate tender and procurement process before the Reeston Agreement was concluded.                                               

In a majority judgment penned by Theron J (Basson AJ, Dlodlo AJ, Goliath AJ, Mhlantla J and Petse AJ concurring), the Constitutional Court granted leave to appeal and upheld the appeal.  It held that the delay by the Municipality in launching its review proceedings was unexplained and thus unreasonable.  The Municipality had conducted itself outrageously and flippantly throughout its litigation.  Significantly, it refused to take the Court into its confidence regarding the irregularities surrounding the Reeston Agreement and attempted to make a settlement agreement about patently unlawful conduct an order of court.  However, because of the manifestly unlawful nature of the Reeston Agreement, the Court was obliged to declare the contract unlawful.  Asla’s scope of work had been expanded significantly without any proper tender process.   In these circumstances, justice and equity dictate that the Municipality should not benefit from its own undue delay and in allowing Asla to proceed to perform in terms of the contract.  The majority judgment therefore made an order declaring the Reeston Agreement invalid, but not setting it aside so as to preserve the rights that Asla might have been entitled to.  It was noted that this award preserves rights which have already accrued but does not permit a party to obtain further rights under the invalid Reeston Agreement.

In a dissenting judgment (the second judgment), Cameron J and Froneman J (Khampepe J concurring) concluded that the main judgment erred in finding that the interests of justice required this Court to make a definitive finding on the lawfulness of the Reeston Agreement.  The second judgment held that the Municipality’s delay in bringing self-review proceedings to set aside its own decision was so lamentably inexcusable, that there is no public interest or constitutional necessity for pronouncing on its legality.  This Court’s jurisprudence and constitutional imperatives envisage instances of this kind and equally insist that delays must be explained.  In the absence of an adequate explanation, justice may not require courts to inquire into unlawfulness.  It would be different where the seriousness of the unlawfulness warrants a court to overlook the delay.  The second judgment accordingly found that the interests of justice do not favour this Court entertaining the Municipality’s application.  The minority thus held that leave to appeal should have been refused.

      

The Full judgment  here