SCA: Bargaining council – award of tender – PAJA & accountability

“A bargaining council, like a trade union and an employers’ association, is a voluntary association that is created by agreement, to perform functions in the interests and for the benefit of its members.   I have considerable difficulty seeing how a bargaining council can be said to be publicly accountable for the procurement of services for a project that is implemented for the benefit of its members – whether it be a medical aid scheme, or a training scheme, or a pension fund, or, in this case, its wellness programme” [para 41].

In Calibre Clinical Consultants (Pty) Ltd v National Bargaining Council for the Road Freight Industry (410/09) [2010] ZASCA 94 (19 July 2010) the Supreme Court of Appeal unanimously disallowed an appeal against the judgment of Willis J in the High Court.

The facts were succintly stated in paras [1] – [3] as follows (note: footnotes have been omitted in all the passages quoted below):

“[1]       The first respondent – the Bargaining Council for the Road Freight Industry – is a bargaining council established under the enabling provisions of s 27 of the Labour Relations Act 66 of 1995 (LRA).   Wishing to appoint a service provider to manage one of its projects the council invited interested parties to submit proposals for its consideration.   Proposals were submitted by, amongst others, a partnership comprising Thebe Ya Bophela Healthcare Administrators (Pty) Ltd (Thebe) and Calibre Clinical Consultants (Pty) Ltd (the latter is the first appellant) to which I shall refer as the partnership, and by a consortium (the second appellant) comprising Right to Care Limited and the remaining appellants, to which I shall refer as the consortium.

[2]        After considering the various proposals the council decided not to appoint any of those who had submitted proposals.   Instead it asked the auditing firm KPMG to assist it to identify an appropriate service provider.   Two candidates were identified, one of which was the second respondent, HIV Managed Care Solutions (Pty) Ltd (it trades under the name Careworks and I will refer to it as such) which the council appointed.

[3]        Aggrieved by the decisions of the council the appellants applied to the High Court at Johannesburg to review and set them aside, relying upon the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).   Their application was dismissed by Willis J.   This appeal against his order is before us with the leave of this court”.

After quoting the relevant sections of PAJA the court stated:

“[21]    It will be readily apparent that once that definition is inserted in PAJA’s definition of ‘administration action’ much of the latter definition is tautologous.   Had the term been defined in PAJA to mean ‘a decision taken (or any failure to take a decision) by an institution or functionary exercising a public power or performing a public function’ it would have covered much the same ground. Once the definition is stripped of its superfluity the enquiry in the present case really comes down to whether the council, in making the decisions that are sought to be impugned, was ‘exercising a public power or performing a public function’.

With regard to the applicable test the SCA stated:

“[40]    It has been said before that there can be no single test of universal application to determine whether a power or function is of a public nature and I agree.   But the extent to which the power or function might or might not be described as ‘governmental’ in nature, even if it is not definitive, seems to me nonetheless to be a useful enquiry.   It directs the enquiry to whether the exercise of the power or the performance of the function might properly be said to entail public accountability and it seems to me that accountability to the public is what judicial review has always been about.    It is about accountability to those with whom the functionary or body has no special relationship other than that they are adversely affected by its conduct and the question in each case will be whether it can properly be said to be accountable notwithstanding the absence of any such special relationship”.

After dealing with the nature of a bargaining council (see para [41] above) the SCA concluded:

“[42]    I do not find in the implementation of such a project any of the features that have been identified in the cases as signifying that it is subject to judicial review.   When implementing such a project a bargaining council is not performing a function that is ‘woven into a system of governmental control’ or ‘integrated into a system of statutory regulation’.   Government does not ‘regulate, supervise and inspect the performance of the function’, the task is not one for which ‘the public has assumed responsibility’, it is not ‘linked to the functions and powers of government’, it is not ‘a privatisation of the business of government itself’, there is not ‘potentially a governmental interest in the decision-making power in question’, the council is not ‘taking the place of central government or local authorities’, and most important, it involves no public money.   It is true that a government might itself undertake a similar project on behalf of the public at large – just as it might provide medical services generally and pensions and training schemes to the public at large – but the council is not substituting for government when it provides such services to employees with whom it is in a special relationship”.

In finding that the exercise of its domestic powers were not subject to review the SCA stated:

“[46]    While it is true that the council ultimately owes its existence and its powers to its enabling statute that applies as much to every company, which ultimately owes its existence and its powers to company legislation, and is by no means determinative of whether it is publicly accountable for its conduct through the remedy of judicial review.   Whatever the case might be in relation to its other functions in my view the council, when managing its wellness fund and procuring services for that purpose, was performing a quintessentially domestic function in the exercise of its domestic powers, and its decisions that are now in issue are not subject to review at the instance of the appellants.   On that ground alone the application should have failed.   But even had the decisions of the council been reviewable, which the court below assumed them to be, I do not think the council can be said to have acted unlawfully”.

Dealing with the submission that the appellants had a right to be heard the SCA stated:

“[53] … In Administrator, Transvaal v Traub Corbett CJ pointed out that in its classic formulation at common law the principle audi alterem partem required a hearing before a decision was taken that prejudicially affected an individual in his or her ‘liberty or property or existing rights’.    That case extended the principle to circumstances in which the interest at stake ‘falls short of a legal right’ but ‘rises to the level of a “legitimate expectation”’ (in the words of Professor Riggs, which were cited with approval).   Nor does a right to be heard when no more than an ‘interest’ is adversely affected find expression in s 3(2)(b) of PAJA.   That subsection affords a right to procedurally fair administrative action (encompassing a right to be heard) where ‘rights or legitimate expectations’ are affected”.

Regarding the possible creation of a right to be heard the SCA stated:

“[55]    In this case there has been no suggestion that the appellants were induced by the council to believe that they would be heard before it took its final decision.   Nor was it suggested that it is the regular practice of public bodies to afford a hearing before it rejects tenders or proposals that they have invited.   No doubt there are cases in which that should occur – that was held to be the case in Logbro Properties – but I would be most hesitant to lay that down as a general rule.   Invitations of various kinds are regularly issued by public bodies – whether to take up employment, or to offer to supply goods or services, or to participate in projects of one kind or another – and it would be most expansive to find that whenever a person responds to such an invitation he or she is entitled to be heard before the response is rejected”.

Finally the SCA concluded that:

“[63]    I do not think the council’s decision not to appoint the appellants offends the provisions of PAJA, and that being so its consequent decisions are also not liable to be set aside.   In my view the order of the court below cannot be faulted and I would dismiss the appeal”.

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