A critical reflection of the Gijima judgments

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Abstract

The facts in the Gijima case were briefly that the State Information Technology Agency (SITA) concluded a state contract with Gijima Holdings to provide IT services to the Department of Defence but failed to follow the procurement proceedings prescribed by section 217 of the Constitution and legislation regulating procurement. The contract was offered as damages for the breach of another state contract to provide such services to the South African Police Service (SAPS), which had been terminated prematurely.

One of the points of dispute was whether the remedy to take administrative action on review in terms of section 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) is available only to the bearers of the right to administrative justice or whether it includes state organs. Section 6(1) specifies: “Any person may institute proceedings in a court or a tribunal for the judicial review of an administrative action.”

Both the High Court and the Supreme Court of Appeal interpreted the phrase “any person” literally and did not contextualise the concept in the light of section 33(1) of the Constitution which confers the right to administrative justice upon “everyone”. Section 33(1) reads as follows: “Everyone has the right to administrative action that is lawful, reasonable and procedurally fair.” Section 33(3) determines that the legislature should adopt legislation that provides “for review of administrative action by a court or, where appropriate, an independent and impartial tribunal” to give effect to the rights in subsections 1 and 2 (this is the right to be given reasons).

Not every right in the Bill of Rights is available to everyone. Some rights are available only to citizens, children or persons belonging to specific groups such as religious, linguistic or cultural groups. The word “everyone” therefore indicates that the right of administrative justice is available to everyone. Section 8(4) of the Constitution further specifies that a juristic person is entitled to such rights to the extent “required by the nature of the rights and the nature of the juristic person”. In this case, Gijima as a juristic person would be entitled to assert the right to administrative justice.

The Constitutional Court fortunately corrected the incorrect interpretation by the courts a quo and held that section 6(1) of the PAJA must be interpreted through the lens of section 33(1) of the Constitution.

Other aspects of the dispute have been resolved less satisfactorily. There was a lot of confusion about the nature of the decision that was taken. In other words, whether it was an illegal administrative act, which could be set aside because it had become legally binding and enforceable, or whether it was an illegal decision in a settlement agreement offering Gijima another state contract as damages for the breach of contract.

The first scenario would entail that there is an administrative act which could be set aside upon judicial review. In the second scenario the court would have had to consider whether the conclusion of the settlement contract was legal in so far as a state contract was offered as damages. In this case the applicable law would be private law and not administrative law.

SITA guaranteed Gijima that it was not bound by procurement procedures for contracts with a value of less than R50 million. This was a misrepresentation of the applicable law. After Gijima had fully performed under the terms of the agreement, SITA tried to repudiate the contract with the argument that it had illegally concluded the contract in contravention of section 217 of the Constitution and procurement legislation.

The second scenario is therefore obviously the applicable one. Yet, all three courts concluded that the secret settlement agreement was an administrative act merely on the basis that there was an empowering provision that would allow SITA to award state contracts in procurement proceedings.

What also stands out is that the various courts did not make a clear distinction between the awarding of a contract in procurement proceedings as a decision that qualifies as an administrative act in terms of subsection (a) of the definition of a decision in section 1 of the PAJA and the offering of a state contract as damages in a settlement agreement for the breach of contract and subsequent conclusion of the contract on the basis of the settlement agreement.

The aim of this contribution is to offer a checklist for a systematic conceptual inquiry to determine whether a specific decision by an administrator in fact qualifies as an administrative act in terms of the provisions of the PAJA. Although the definition of administrative action in section 1 of the PAJA is seriously flawed from a constitutional law perspective, the courts can nevertheless avoid the misidentification of administrative action with such a systematic inquiry.

A court ought to examine, first, whether the person or institution taking the decision is an administrator; second, whether there is an empowering provision to take such administrative action; third, whether the decision is of an administrative nature; and fourth, whether the type of decision can be identified as one of the measures listed by the definition of a decision. Finally, it must be inquired whether the decision has a direct, external legal effect. This means that the person for whom the measure is intended must be personally informed about the contents of the decision, and once that has been done the administrative act has the legal effect that becomes binding and enforceable. This is important because a decision can be taken on judicial review only if it in fact qualifies as an administrative act and has become legally binding.

These steps are important to avoid a misidentification of an administrative act as happened in the Gijima judgments. In casu the courts only checked whether there was an empowering statute to award state contracts in procurement proceedings but did not go on to examine whether the decision in the concrete case was administrative in nature, could be identified as a decision of the kind listed in the definition or had a direct external legal effect to make it legally binding. The offer of a state contract as damages in a breach of contract settlement is not a decision of an administrative nature. The decision is of a contractual nature and falls in the domain of private law. The offering of state contracts as damages also does not fall within the scope of an administrative definition as foreseen by subsection (a) of the definition of a decision. The offer of the state contract was also not taken in the form of an administrative act, because there was no decision in procurement proceedings that awarded the contract to Gijima. The decision was also not communicated to Gijima in the prescribed form of such an award, which would make the decision legally binding and enforceable. The requirement of a direct, external legal effect was therefore also not met.

It is not clear whether the Supreme Court of Appeal and the Constitutional Court wanted to construe a failure to abide by procurement proceedings and take a decision in that context as a legally binding administrative act. The courts did not offer any justification in this regard with a reference to the definition of an administrative act in section 1 of the PAJA. It is a mystery, however, how a non-act with no content communicated to the relevant person could be legally binding and enforceable.

It can have far-reaching repercussions when such confidential agreements should in future be regarded as administrative acts. It would throw the doors wide open for corruption, as the Bosasa scandal that came to light in evidence presented to the Commission of Inquiry into State Capture illustrated.

Keywords: administrative action; award; decision; failure; illegal contract

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’n Kritiese betragting van die Gijima-uitsprake

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