Justice and Equity for Gijima Holdings (Pty) Ltd, shouts the recent judgment handed down by The Constitutional Court of South Africa

I have been privileged to advise Gijima Holdings (Pty) Ltd (Gijima) (as external legal advisor) during their protracted court battles against the State Information Technology Agency (SITA), during which time Gijima has fought tirelessly to enforce their rights in terms of an agreement entered into between Gijima and SITA, in which Gijima rendered information technology (IT) services to the Department of Defence (DOD agreement).

Background

  • On 27 September 2006, SITA and Gijima entered into an agreement in terms of which Gijima was to provide IT services to the South African Police Service.
  •  That agreement was subsequently terminated by SITA, which resulted in a loss of approximately R20 million in future revenue for Gijima.
  •  In response, Gijima instituted urgent proceedings in the High Court of South Africa, Gauteng Division, Pretoria. On 6 February 2012, the parties entered into a settlement agreement in terms of which Gijima would render IT services to the Department of Defence.
  •  Gijima raised its concerns about the lawfulness of the DOD agreement with SITA, but on more than one occasion SITA assured Gijima that the agreement complied with procurement prescripts.
  •  Gijima accordingly rendered IT services to the Department of Defence.
  • The agreement concerning these services was extended several times and a payment dispute subsequently arose between the parties. This dispute went to arbitration, during which proceedings, SITA pleaded that the DOD agreement was concluded in contravention of section 217 of the Constitution of the Republic of South Africa No 108 of 1996 (Constitution).
  • The arbitrator ruled, rightfully so, that he did not have jurisdiction to determine this constitutional challenge.

North Gauteng, High Court Pretoria (High Court)

  • In the High Court, SITA brought an application to set aside the DOD agreement on the basis set out above.
  •  SITA instituted these proceedings outside of the 180-day period within which a review of administrative action must be brought in terms of The Promotion of Administrative Justice Act 3 of 2000 (PAJA).
  • The High Court held that the PAJA applied because a decision to award and renew the DOD agreement qualifies as administrative action as defined in the PAJA. This meant that, unless the Court, acting in terms of the provisions of the PAJA, sanctioned the late application, the application could not be entertained.
  •  The High Court concluded that it would not be just and equitable to set aside the main agreement and dismissed the application with costs.

Supreme Court of Appeal

  •  In the Supreme Court of Appeal, the majority agreed with the High Court, in that a decision to award a contract for services constitutes administrative action in terms of the PAJA.
  •  The majority concluded that the PAJA applies to review applications instituted by organs of state and given that the application was brought after the expiry of the 180-day period, dismissed the appeal with costs.

Constitutional Court

The Constitutional court remarked that two questions had to be answered to determine the matter:

1.      By what means may an organ of state seek the review and setting aside of its own decision? May it invoke the PAJA; or

2.       Is the appropriate route legality review?

  •  In the Constitutional Court, SITA argued that when an organ of state seeks to review and set aside its own conduct, it does so on the basis that its conduct is inconsistent with the Constitution. It contended that the review should be decided in terms of the principle of legality, and not in terms of the PAJA.
  •  Gijima argued that there is no reason to exempt organs of state from the applicability of the PAJA.
  •  The Court held that –
  1. The PAJA does not apply when an organ of state applies for the review of its own decision and that an organ of state seeking to review its own decision must do so under the principle of legality.
  2. By awarding the contract to Gijima, SITA acted contrary to the dictates of section 217 of the Constitution.

It thus declared the award of the DOD agreement invalid.

However, The Court held that under section 172(1)(b) of the Constitution, a court deciding a constitutional matter has a wide remedial power, in that –

  • It is empowered to make “any order that is just and equitable”.
  •  So wide is that power that it is bound only by considerations of justice and equity. Here it must count for quite a lot that SITA delayed for just under 22 months before seeking to have the decision reviewed.
  • In addition, from the outset, Gijima was concerned whether the award of the contract complied with legal prescripts. As a result, it raised the issue with SITA repeatedly. SITA assured it that a proper procurement process had been followed.

(para 53 )

  • Overall, it seemed to the Court that justice and equity dictate that, despite the invalidity of the award of the DOD agreement, SITA must not benefit from having given Gijima false assurances and from its own undue delay in instituting proceedings.
  •  In the circumstances, a just and equitable remedy is that the award of the contract and the subsequent decisions to extend it be declared invalid, with a rider that the declaration of invalidity must not have the effect of divesting Gijima of rights to which, but for the declaration of invalidity, it might have been entitled.

(para 54 )

  • As to costs, The Court held that SITA achieves nominal success to the extent that there is a declaration of constitutional invalidity. Must this affect the question of costs? No. Substantially it is Gijima that succeeds. We say so because SITA’s efforts were directed at avoiding the contract and Gijima, on the other hand, sought to hold on to the contract. To the extent that it is not to be divested of its entitlement under the contract, Gijima has managed to ward off SITA’s efforts; that is the success we are referring to. Also counting against SITA on the question of costs is its repeated, but untruthful, assurances that proper procurement prescripts had been complied with in awarding the contract. Gijima is thus entitled to all its costs, including costs of two counsel.
  • (para 54 )

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