2 December 2015 by and Dispute Resolution Matters

Do courts have the power to substitute a decision to award a tender?

It is generally prudent and proper that upon review, a flawed decision is remitted to the administrative decision-maker (organ of state) for reconsideration. The reasons for this rule as held in the case of Gauteng Gambling Board v Silverstar Development Ltd and others 2005 (4) SA 67 (SCA) are not only constitutional, but institutional in nature as the administrative organ (Administrator) on which a power is conferred is the appropriate entity to exercise such decision-making powers.

There are, however, exceptions to the aforesaid norm in that a court of review may, in exceptional circumstances, depart from the rule and substitute its decision for that of the administrator. This power is expressly conferred upon a court of review by s8(1)(c)(ii)(aa) of the Promotion of Administrative Justice Act, 3 of 2000 (PAJA) as part of its wide powers to grant "any order that is just and equitable".

In deciding whether ‘exceptional circumstances’ exist, the overriding principle is that of fairness. In Livestock and Meat Industries Control Board v Garda 1961 (1) SA 342 (A), the court held that "the Court has a discretion, to be exercised judicially upon a consideration of the facts of each case, and … although the matter will be sent back, if there is no reason for not doing so, in essence it is a question of fairness to both sides".

Courts have over the years developed guidelines for identifying ‘exceptional circumstances’. These guidelines can be summarised as follows:

(a)where the end result is a foregone conclusion and it would be a waste of time to order the Administrator to reconsider the matter;

(b)where a further delay would cause unjustifiable prejudice to the applicant; and

(c)where the Administrator has exhibited bias or incompetence of such a degree that it would be unfair to require the applicant to submit to the same jurisdiction again.

In Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and another 2015 (5) 
SA 245 (CC) the principles as set out above were confirmed, in that the court held that once a court has established that it is in as good a position as the administrator, it is competent to enquire into whether the decision of the administrator is a forgone conclusion. The court held that a foregone conclusion exists where there is only one proper outcome of the discretion exercised by an administrator.

Accordingly, courts taking into context the above principles have the power to substitute the decision of an Administrator (setting aside the award and substituting the successful tenderer with an unsuccessful tenderer), but can only do so upon a proper consideration of all the relevant facts. 

Once a court is persuaded that a decision to exercise a power should not be left to the administrative organ it can exercise such power. 

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