CONSTITUTIONAL COURT OF SOUTH AFRICA
State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
CCT 254/16 Date of hearing: 9 May 2017 ________________________________________________________________________
MEDIA SUMMARY
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The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On 9 May 2017 at 10h00, the Constitutional Court will hear an application for leave to appeal in a matter concerning whether an organ of state can seek the review and setting aside of its own decision in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).
On 27 September 2006 the State Information Technology Agency SOC Ltd (SITA) and Gijima Holdings (Pty) Ltd (Gijima) entered into an agreement in terms of which Gijima was to provide information technology services (IT services) to the South African Police Service (SAPS agreement). That agreement was, however, terminated by SITA. This resulted in Gijima forfeiting R20 million in its revenue. Gijima instituted urgent proceedings in the High Court of South Africa, Gauteng Division, Pretoria (High Court) to protect its rights under the SAPS agreement.
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 (DoD services agreement). The settlement agreement also provided that SITA would compensate Gijima for losses which arose from the termination of the SAPS agreement.
Pursuant to the DoD services agreement, Gijima rendered IT services to the Department of Defence. The said agreement was extended at various intervals. A payment dispute arose between the parties.
In proceedings before an arbitral tribunal, SITA for the first time pleaded that the DoD services agreement was concluded in contravention of section 217 of the Constitution.
The arbitrator was faced with a constitutional challenge and issued an award ruling that he did not have jurisdiction.
In the High Court SITA sought to set aside the DoD services agreement due to non- compliance with section 217. These proceedings were instituted well over 180 days. In terms of PAJA, the review of administrative action must ordinarily be brought within 180 days. If PAJA was applicable, this meant that, unless the Court – acting in terms of the provisions of PAJA – sanctioned the late application, the application could not be entertained. The High Court held that a decision to award and renew the DoD services agreement qualifies as administrative action which implicates the provisions under PAJA.
The Court concluded that it will not be just and equitable to set aside the main agreement for the following reasons: (1) SITA has received the services provided by Gijima for a lengthy period of time, substantial payments have been made to Gijima and services cannot be reversed; (2) there is no indication of corruption or wrongdoing by the respondent in relation to SITA’s non-compliance with section 217 of the Constitution; (3) there are no disappointed tenders who wasted resources in a tender process who stand to benefit by the setting aside of the main agreement and its addenda; and (4) Gijima forfeited contractual damages against the applicant in excess of R20 million. The Court dismissed the application with costs.
In the Supreme Court of Appeal, the majority held that a decision to award a contract for services constitutes administrative action in terms of section 1 of PAJA and held that, on that basis alone, there exists no good reason for immunising administrative decisions taken by the state under PAJA. The majority dismissed the appeal with costs and concluded that PAJA applies to review applications instituted by organs of state.
In this Court, SITA argues 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 and the question should be one of legality, and not PAJA.
Gijima argues that section 217 of the Constitution requires of an organ of state to devise a system of fair procurement that admits only of exceptional deviations. Gijima emphasises that there is no reason to exempt organs of state from the applicability of PAJA and devise a separate system of judicial review for them. Government should generally be required to follow the same forms and processes for review as other parties.
