The Constitutional Court in State Information Technology Agency Soc Limited v Gijima Holdings (Pty) Ltd held that a state applicant seeking the judicial review of their own decision may not rely on the Promotion of Administrative Justice Act 2000 and must do so in terms of the principle of legality. An application for review must be launched within a reasonable time.
The ordinary consequence of a finding of unreasonable delay is that the court will not determine the merits of the case. However in Gijima, the Constitutional Court held that even if the delay is found to be unreasonable, if the agreement is invalid, it would be unconstitutional to enforce it.
This judgment and others such as Buffalo City Metropolitan Municipality v Asla Construction (Pty) created some uncertainty about the effect of delay on reviews.
The Supreme Court of Appeal (SCA) has provided some clarity in Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality in which it refused to set aside the City of Tshwane’s municipal broadband contract on the basis that the unexplained two year delay in bringing the application for review was excessive.
The appeal concerned the lawfulness of a decision by the City to appoint Altech as a service provider of a municipal broadband network project (the broadband project) pursuant to a tender process.
Upon the award of the tender, Altech procured financing for the project from two lenders.
Nine months after the award of the tender, a Build Operate and Transfer agreement (BOT agreement) was signed and a couple of months thereafter, a tripartite agreement was concluded by the City, the lenders and the service provider (Thobela, Altech’s project company).
Shortly after the tripartite agreement was signed, the ANC lost control of the City. The DA reconsidered a number of the City’s procurement contracts, including the BOT agreement.
Despite its reservations, the City only approached the high court for relief, roughly a year after the DA first set its sights on the BOT agreement.
The SCA confirmed that:
- the delay rule principle flows directly from the rule of law and its requirement for certainty, and held that the City had a duty to bring its review application expeditiously;
- while a legality review does not have to be brought within a fixed period, the period must be reasonable;
- in assessing undue delay, a court must consider whether the delay is unreasonable or undue (this is a factual enquiry); and
- if the delay is unreasonable, the court must decide whether it should nevertheless exercise its discretion to overlook the delay.
The City was obliged to provide a full explanation for the period of the delay. The City argued that the delay was justified, because the DA needed time to investigate the alleged irregularities under the previous administration when it took over. The SCA did not agree that ‘new officials had to find their way virtually in the dark to establish the correctness or otherwise of the decisions of their predecessors’. Instead, the SCA held that as a matter of law a change in political control of an organ of state is irrelevant, as the City is a single juristic entity.
The SCA ultimately found that there was no acceptable explanation for the City’s excessive delay and inconsistent conduct. The City knew of the facts relevant to certain grounds of review long before the BOT agreement was signed. Despite having knowledge of certain alleged irregularities for more than two years, the City demanded that Altech accelerate the project to make up for lost time caused by the City’s own conduct. As a result of the City’s encouragement, Altech incurred enormous expenditure. The City was fully aware of the lenders involvement, the terms on which they were lending money, and the possible risk to them. Only when the review proceedings were launched did the City give the lenders any indication that the tender process may have been irregular, or that the transactions to which the lenders were party were susceptible to being set aside.
Despite these findings, the SCA still had to consider whether the prospects of success on the merits tipped the scales in favour of the City and found that they did not because the alleged irregularities and discrepancies relied on by the City were not material. Some or other non-compliance is commonplace in public procurement but not every flaw amounts to a material irregularity.
The court also noted that the object of self-review is to promote open, responsive, and accountable government and was doubtful of the City’s motives in bringing the review. Therefore the City’s application failed.
Accordingly, where it would not be unconstitutional to uphold a contract (i.e. where that contract is not invalid and the irregularities are not material) an unreasonable delay will not be condoned.