City of Tshwane v Nambiti Technologies (Pty) Ltd (20580/2014) [2015] ZASCA 167 (26 November 2015) per Wallis JA (Maya DP, Bosielo, Petse and Dambuza JJA concurring)

The Supreme Court of Appeal allowed the appeal and set aside the order of Kganyago AJ in the High Court.

SCA summary: Tender – cancellation thereof – terms of tender authorising its withdrawal – cancellation not administrative action – cancellation set aside by High Court as unfair and municipality ordered to adjudicate tender – no grounds for holding cancellation unfair – relief granted by High Court impinging on municipality’s powers and obligations in regard to procurement – such impermissible as infringing the doctrine of the separation of powers.

Excerpts [footnotes omitted]


[6]     There is no need to rehearse the jurisprudence that developed around section 21A(1) of the Supreme Court Act 59 of 1959, which jurisprudence is equally applicable under section 16(2)(a)(i) of the Superior Courts Act. The court has a discretion notwithstanding that an appeal has become moot, to hear and dispose of it on its merits.  The usual ground for exercising that discretion in favour of dealing with it on the merits is that the case raises a discrete issue of public importance that will have an effect on future matters.

[7]     In my view there is such an issue in this case.  This is the first occasion in the reported cases where a decision by a public authority to cancel a tender has been challenged by way of judicial review.  Not only is this the first such case, but the review succeeded and the court ordered the City to adjudicate and award the cancelled tender.  That was a far-reaching order impinging as it did on the power of a municipal council to determine for itself what goods and services it needed and would procure by a process complying with s 217 of the Constitution.  Whether such a decision is administrative action bringing the case within the purview of PAJA is central to the case.  Furthermore the terms of the order granted by the high court had the potential to infringe upon the constitutional powers and obligations of a municipal council.  Accordingly the mootness of the appeal should not bar the court from addressing the merits.

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Was this administrative action?

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[24]     Whether the cancellation of a tender before adjudication is administrative action in terms of these requirements depends on whether it involves a decision of an administrative nature and whether it has direct, external legal effect. I do not think that the decision in this case satisfied either of these criteria.

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[34]     It follows that the decision by the City to cancel the tender was not administrative action and was not susceptible of review in terms of PAJA.  As that was the sole basis upon which the review was brought it should have failed on this ground.  But even if the decision had been susceptible to judicial review on the grounds of unfairness advanced by Nambiti it should not I think have succeeded.  It is appropriate briefly to state my reasons for saying that.

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The fairness of the cancellation

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[41]     It follows that there were no grounds upon which the judge was entitled to come to the conclusion that the decision to cancel the tender CB204/2012 was unfair, even if one assumes that this was a ground on which the court was entitled to intervene. On that ground as well the appeal must succeed.  But before concluding it is desirable that I say something about the relief granted by the high court.

The relief

[42]     I have already set out the terms of the order granted by the high court. It effectively compelled the City to consider and award a tender that it had decided should not be proceeded with.  The fact that the tender, on its own terms, reserved the City’s right not to accept any of the tenders was ignored.  Instead the court took it upon itself to order the City to procure SAP support services in terms of a contract concluded after a tender process on the terms stipulated by the high court.

[43]     That this was the effect of the order should have given pause for thought.  A decision as to the procurement of goods and services by an organ of State is one that lies within the heartland of the exercise of executive authority by that organ of State.  We live in a country of finite resources at every level of government.  Decisions by organs of State on how their limited resources will be spent inevitably involve painful compromises.  [None more so than that in Soobramoney v Minister of Health.  KwaZulu-Natal [1997] ZACC 17; 1998 (1) A 765 (CC)]  A decision to spend money on support systems for computer technology will divert those resources from other projects such as the construction of roads or the provision of rubbish collection in residential areas.  The Constitution entrusts these decisions to elected bodies at all three tiers of government.  In turn the elected representatives at every tier select the executive that is required to carry out the chosen programme of government.  It is an extremely serious matter for a court to intervene in such decisions.  But for it to do so by compelling the organ of State to enter into contracts and acquire goods and services that it has determined not to acquire, or at least not to acquire on the terms of a specific tender, is something that, if open to a court to do at all, should only be done in extreme circumstances.  These issues are among those comprehended by the broad doctrine of the separation of powers.  But the court here does not appear to have been alive to them or to the impact of its orders.  That should not have been the case.