6 December 2017 by Dispute Resolution Alert

Are organs of state bound by PAJA when reviewing their own decisions?

In a previous alert, we highlighted a persistent uncertainty for litigants, in particular organs of state, regarding whether or not the Promotion of Administrative Justice Act, 2000 (PAJA) applies when seeking to review their own decisions. This uncertainty was confirmed by the Constitutional Court in City of Cape Town v Aurecon South Africa (Pty) Ltd 2017 (4) SA 223 (CC). In that matter Mbha AJ asked: “Is an administrator’s right to review its own decision sourced in PAJA or the broader principle of legality?” The learned Judge elected to leave this question open.

The Constitutional Court recently delivered clarity in a landmark judgment: State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Ltd [2017] ZACC 40.

The facts were these: In September 2006 the State Information Technology Agency (SITA), the government’s information technology procurement agency, concluded an agreement in terms of which Gijima, a private company, would provide information technology services to the South African Police Service. The agreement was subject to various extensions and revisions. Throughout the contract and negotiation period Gijima was concerned that the necessary procurement processes had not been complied with. SITA, however, assured Gijima that proper procedures had been followed and went so far as to provide an unconditional warranty in this regard.

When a payment dispute arose in 2013, SITA argued that the agreement with Gijima was invalid for want of compliance with the constitutional prescripts regarding public procurement, in particular, s217 of the Constitution. The issue could not be determined at arbitration and SITA approached the High Court to review and set aside the agreement under the principle of legality.

The High Court concluded that SITA had to challenge its decision to conclude the agreement by way of judicial review in terms of PAJA. Such a review should have been brought within 180 days of the impugned decision, rendering SITA’s review application many months late. However, the High Court found that SITA had failed to explain its reasons for the lengthy delay and further failed to make out any case for the extension of the 180-day period. It therefore dismissed SITA’s challenge.

A majority of the Supreme Court of Appeal came to the same conclusion as the High Court, deciding emphatically that SITA was bound by, and had failed to comply with, the provisions of PAJA in prosecuting the review. On the other hand, a minority of the appeal judges favoured a more flexible approach and would have permitted SITA to have the impugned contract reviewed in accordance with the principle of legality, with the result that SITA would not have been required to comply with the 180-day period imposed by PAJA.

The Constitutional Court did not agree with the High Court or the majority decision of the Supreme Court of Appeal, finding that an organ of state is not bound by PAJA when seeking to set aside its own decision. Essentially, so Madlanga J and Pretorius AJ reasoned, this is because s33 of the Constitution, and therefore the provisions of PAJA, operates for the benefit of private persons and functions only to impose duties – rather than to confer rights – on organs of state. That being so, SITA – as the public decision-maker in question – was not obliged to comply with PAJA’s 180-day period when it sought to set aside the agreement with Gijima.

The Constitutional Court determined that SITA had to review its decision in terms of the principle of legality. The Court accepted that the agreement had not been concluded pursuant to a competitive bidding process, in contravention of s217 of the Constitution. However, Madlanga J and Pretorius AJ found SITA’s delay in instituting the review to have been unreasonable, particularly in the face of Gijima’s repeatedly expressed concerns about the procurement process. The Court therefore declared the agreement invalid, but qualified that declaration so that it would “not have the effect of divesting Gijima of rights to which – but for the declaration of invalidity – it might have been entitled”. This could, in effect, allow Gijima to seek contractual relief against SITA notwithstanding that contract having been determined by the Court to be invalid.

The Constitutional Court’s decision will introduce a measure of uncertainty into the realm of administrative law as administrators are no longer bound by PAJA’s 180-day rule when seeking to correct their own decisions. While the principle of legality still requires a review to be brought without undue delay, the determination of what constitutes an “undue delay” is done on a case-by-case basis with no hard and fast rules. Citizens may therefore no longer rely on the 180-day period as an assurance that a particular administrative decision will generally be insulated from review.

Another concerning aspect is that if administrators must utilise the principle of legality in reviewing their own decisions, it means that they cannot initiate a review based on grounds that arise only under PAJA. The principle of legality provides that a decision may be reviewed if it is unlawful or irrational. PAJA goes further and provides that a decision may also be reviewed if it is unreasonable or procedurally unfair. Following the Constitutional Court’s decision, it is possible that, in the absence of other legislative provisions imposing standards of fairness and reasonableness, administrators may not be able to rely on these fundamental grounds of review in seeking to correct their own defective decisions.

The Court has now brought clarity to PAJA’s applicability in certain circumstances. It was also careful not to extend its findings to public-interest litigation by an organ of state or to an attempt by one organ of state to review the decision of another organ of state. Nevertheless, the Court has limited the bases on which administrators may review their own decisions and, at the same time, introduced a further measure of uncertainty to administrative decisions.

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