South African Tourism Board v Swift Thinking (Pty) Ltd and Another ; South African Tourism Board v Letsema Consulting and Advisory (Pty) Ltd and Another (64333/21; 64334/21) [2024] ZAGPPHC 1224 (6 December 2024)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

 

 

 

 

 

 

CASE NO: 64333/21

In the matter between:

 

SOUTH AFRICAN TOURISM BOARD Applicant

 

and

 

SWIFT THINKING (PTY) LTD First Respondent

TOURISM BUSINESS COUNCIL OF SOUTH AFRICA Second Respondent

 

CASE NO: 64334/21

 

In the matter between:

 

SOUTH AFRICAN TOURISM BOARD Applicant

 

and

 

LETSEMA CONSULTING AND ADVISORY (PTY) LTD First Respondent

TOURISM BUSINESS COUNCIL OF SOUTH AFRICA Second Respondent

 

DATE OF JUDGMENT: This judgment was handed down electronically by circulation to the parties’ representatives by email. The date and time of hand-down is deemed to be 10h00 on 06 December 2024.

 

 

JUDGMENT

 

Khashane Manamela, AJ

INTRODUCTION

[1] This judgment concerns two separate legality review¹ applications by South African Tourism Board (‘SA Tourism’), the one, against Swift Thinking (Pty) Ltd (‘Swift’) (under case number 64333/21) and, the other, against Letsema Consulting and Advisory (Pty) Ltd (‘Letsema’) (under case number 64334/21). The judgment includes a table of contents under paragraph 6 for a quick guide on locating joint and separate material relating to the two applications.

[2] In both applications SA Tourism seeks almost identical relief for review and setting aside of the appointments of or decisions to appoint Swift, in the one case, and Letsema, in the other case, as service providers under circumstances which SA Tourism considers to have been in breach of section 217² of the Constitution of the Republic of South Africa, 1996 (‘the Constitution’) and SA Tourism’s own procurement policy. SA Tourism, consequently, seeks that the procurement decisions or appointments be reviewed, declared unlawful and invalid, and set aside. Further, SA Tourism requires this Court to direct Swift and Letsema to repay to SA Tourism either the full amount paid or profits earned pursuant to the appointments, as just and equitable relief as envisaged in section 172(1)(b)³ of the Constitution. A complete list of issues for determination appears below.⁴

[3] The respective applications are opposed by Swift and Letsema. Swift’s opposition includes a counterapplication for payment of the outstanding or unpaid invoices for the services Swift claims to have rendered.

[4] SA Tourism Business Council of South Africa (‘TBCSA’), as appearing above, is cited as the second respondent in both applications. It was joined, in both matters, in terms of identical orders of this Court made on 21 November 2023, when the matters were previously before the Court for a hearing. The non-joinder of TBCSA had been raised by Letsema as one of its points of opposition of the application. Letsema argued that TBCSA has a direct and substantial interest in the relief sought in the application. TBCSA is described in the papers as the umbrella organisation representing the voice of the private businesses involved in the travel and South African tourism sector. TBCSA was also required to file affidavits in both matters ‘furnishing comprehensive explanation pertaining to its role in the dispute[s]’. TBCSA, though, does not appear to have played any role beyond compliance with the said orders of the Court. The only outstanding issue in terms of the November 2023 order is the issue of costs occasioned by the joinder of TBCSA and postponement of both applications. Issues relating to costs are dealt with towards the end of this judgment.

[5] On 06 August 2024, the application against Swift (‘the Swift application’) came before the Court. Mr K Tsatsawane SC, together with Ms N Makhaye, appeared for SA Tourism and Mr V Mabuza appeared for Swift. The next day, on 07 August 2024, the application against Letsema (‘the Letsema application’) was heard. Mr Tsatsawane SC and Ms Makhaye, again, appeared for SA Tourism whereas Mr G Budlender SC, accompanied by Mr W van Aswegen, appeared for Letsema. Ms K Lefaladi appeared on both dates on behalf of TBCSA, but effectively on a ‘watching brief’. I reserved judgment in both matters after listening to oral submissions by counsel. The judgment also, gratefully, benefitted from the comprehensive heads of argument filed by counsel.

[6] Although the matters relate to distinct decisions by or procurement processes of SA Tourism, the background issues, generally, and legal principles applicable to the issues are similar, or even identical, in both matters. Some of the areas in the matters are overlapping. For, primarily, these reasons I decided to write a single judgment. To alleviate any inherent challenges from this approach, I provided - in table 6.1 below - a layout or table of contents for quick guide on how to navigate or locate material in the judgment, particularly in areas of divergence.

Table 6.1: Layout or table of contents of the material in the Swift and Letsema applications

Item	Paragraphs	Issue	Swift	Letsema
	1-6	Introduction
	7-13	Brief background (General)
	14-16	Swift application (own relevant background)
	17-20	Letsema application (own relevant background)
	21-41	SWIFT APPLICATION
	42-58	LETSEMA APPLICATION
	59-70	APPLICABLE LEGAL FRAMEWORK OR PRINCIPLES
		ISSUES REQUIRING DETERMINATION
	71-74	General
	75-82	Legality review, Rules 6 and 53, and the review record
	83-90	Unreasonable delay (General)
	91-103	Reasonableness of the delay in bringing the Swift application and the Letsema application
	104-108	Whether the procurement involving Swift is unlawful (plus preliminary objection)
	109-110	Whether the procurement involving Letsema was unlawful?
	111-117	Just and equitable relief in the Swift and Letsema applications
	118-120	CONCLUSION AND COSTS
		ORDER
	121	Swift Order
	122	Letsema Order

 

BRIEF BACKGROUND (BOTH APPLICATIONS)

General

[7] SA Tourism is a juristic person and an organ of state established in terms of section 2 of the Tourism Act 72 of 1993 and continuing to exist as such in terms of section 9 of the Tourism Act 3 of 2014 (‘the Tourism Act’).

[8] At all material times to both applications, Mr Sisa Ntshona (‘Mr Ntshona’) was the chief executive officer (‘CEO’) of SA Tourism until on 31 May 2021, when he resigned and left SA Tourism. At the time of the launch of the applications Mr Mzilikazi Khumalo, the deponent to SA Tourism’s papers, was its CEO, albeit in acting capacity.

[9] Both SA Tourism’s cases, as fully discussed below,⁵ are pivoted on the ground that Mr Ntshona was solely responsible for the impugned decisions or the appointment of Letsema and Swift as service providers and did so without complying with the material statutory and policy instruments. Consequently, the decisions ought to be declared unlawful and invalid, reviewed and set aside. The appointments pursuant to the decisions ought to be declared unlawful and invalid and then set aside. I have to hasten to say that the attribution of sole responsibility to Mr Ntshona would be vital for the issues in the application and the relief sought. When the discourse enters this terrain, the applicable legal principles, would be influential. Naturally, the primary applicable legislation will be the Constitution, the supreme law of South Africa (‘SA’).⁶

[10] According to SA Tourism, a compliant procurement process by SA Tourism would bear the following compulsory hallmarks. The procurement exercise would be preceded by an assessment of SA Tourism’s needs for the goods or services to be procured. This is referred to as ‘demand management’. A demand management would be followed by a determination of the appropriate procurement process. The procurement ought to be by way of a competitive bidding process, save where circumstances (for example, in case of an emergency) dictate otherwise and the approval for the deviation is obtained from the board of directors of SA Tourism (‘the Board’). SA Tourism, in both applications, says the procurement processes which led to the appointment of Swift and Letsema did not comply with the requisite laws and policy.⁷

[11] SA Tourism says it became aware of the irregularities relating to the Swift and Letsema transactions in December 2020. This led to the Board, on 07 January 2021, requesting its functionaries from the internal audit unit to provide a factual report on the ‘working relationship’ between SA Tourism and TBCSA. Internal audit presented a report of its findings to the Board on 27 March 2021. This, according to SA Tourism is the date when the Board became aware of the alleged unlawful appointments of Swift and Letsema. On 31 March 2021, the Board resolved to conduct a forensic investigation into the transactions involving Letsema and Swift.

[12] On 31 May 2021, Mr Ntshona resigned as CEO and employee of SA Tourism. According to SA Tourism this was before the completion of the forensic investigation and before any disciplinary steps could be instituted against him. The forensic investigation was finalised in August 2021, but SA Tourism, thereafter, sought legal advice. The forensic investigation report is not included in the papers of both applications. SA Tourism says this was due to its immense size or volume. Quite interestingly, SA Tourism also say that it was not necessary to include the report as the appointments are impugned on the basis that they were not preceded by competitive bidding process and violated section 217 of the Constitution, as well as SA Tourism’s supply chain management policy (the ‘SCM policy’). I deal with the absence of the investigation report and that of the review record, below.⁸

[13] Legal advice was obtained on 08 October 2021. The advice recommended disciplinary action against the employees of SA Tourism implicated in the appointments. This led to Mr Sthembiso Dlamini (‘Mr Dlamini’), SA Tourism’s chief operations officer, and Ms Nombulelo Guliwe (‘Ms Guliwe’), SA Tourism’s chief financial officer, being sanctioned by the Board. Each of them received a six months’ written warning for their role in the appointments of Swift and Letsema. The legal advice also recommended the launch of these applications. Next, I highlight the facts in the particular background to both Swift and Letsema applications.

Swift application (own relevant background)

[14] Swift’s appointments or impugned procurement decisions commenced in March 2020 when Mr Ntshona instructed his colleague, Ms Candice Machado (‘Ms Machado’), to contact Mr Robert Latham (‘Mr Latham’) of Swift, regarding the engagement or appointment of Swift as a service provider.

[15] The only document which preceded Swift’s appointment is an unsigned request for approval.⁹ The document referred, primarily, to the need for SA Tourism to step in and provide a solution to the problem of ‘fragmented tourism data ecosystem’ in identification of location of all travellers in SA ensuing from the Covid-19 pandemic and consequent lockdown and travel bans. It also mentioned that SA Tourism had identified a solution to urgently address the ‘extraordinary crisis’ and related needs through Swift for delivery of: (a) ‘all current data manually captured, cleaned-up, verified and sent to SA Tourism’; (b) an ‘automated process of processing the data’; (c) a ‘portal through which establishments and users can uphold the data’, and (d) a ‘visualization dashboard to show the number of travelers and establishments’. The project(s) is/are described as International Visitor Tracking Portal, a TechHub and Covid Tracking and Data Capture Support programme/software (‘International Visitor projects’). The financial implications of the exercise or procurement was stated as R783 356. The document concluded with a request for approval of ‘the proposal and related costs so that it can be submitted to TBCSA for processing’.¹⁰ As would become clear below, SA Tourism now argues that TBCSA had nothing to do with Swift’s appointment.

[16] Swift’s case is that it delivered the software under the ‘initial agreement’ with SA Tourism in January 2021. Prior to completion of the work under the initial agreement, Swift says, it was engaged in further procurement (i.e. the ‘SOW 7 agreement’). The latter was delivered and signed off on 25 March 2021. The conclusion of the SOW 7 agreement is denied by SA Tourism, although this may only be with regard to the ‘quality and standard’ of the work done by Swift. Swift was paid an amount of R8 169 109, 40 for the services, but an amount of R1 115 500, 00 remains unpaid. The payment came from TBCSA under circumstances to be discussed in detail below. Swift is claiming payment of its unpaid invoice by way of counterapplication, also to be dealt with below.

Letsema application (own relevant background)

[17] The procurement relating to Letsema (or rather its appointment to render services) also commenced during March 2020. This was also instigated by Mr Ntshona as the CEO of SA Tourism. He told Mr Michael Harris (‘Mr Harris’) of Letsema that the Department of Tourism (‘the Department’) was desperately seeking to develop a recovery strategy for the tourism sector (‘the Recovery Plan’). Also, that he was assigned by the Minister to oversee the development of the Recovery Plan. Mr Ntshona invited Letsema to submit a proposal for Letsema to be appointed to lead a project team to develop the Recovery Plan. As with the Swift procurement, this was said to be in reaction to the risks posed by the COVID-19 pandemic. Letsema submitted a proposal which reflected an estimated cost of R1 059 700 per month payable to it for its services for a period of three months. Letsema was also engaged to develop and implement a suite of management and data systems to empower SA Tourism to properly implement, manage and develop the Recovery Plan in August 2020.

[18] According to Letsema, the projects were understood to be under the strategic partnership between SA Tourism and TBCSA. Letsema was to conclude a contract with TBCSA with the latter also responsible for payment for the services rendered by Letsema. Indeed, Letsema submitted invoices to TBCSA for services rendered. They were paid.

[19] All these were despite the absence of a written agreement between Letsema and SA Tourism or between Letsema and TBCSA. Attempts to finalise a draft service level agreement presented for signature in February 2021 appear to have fallen through. Around the same time Letsema was informed by TBCSA that Letsema was never appointed to provide services to TBCSA. It was requested thenceforth to direct its invoices to SA Tourism.

[20] In September 2021, Letsema demanded payment of the outstanding amount of R3 773 246 from SA Tourism. The latter reacted on 03 November 2021, through its attorneys, stating that it was contemplating to approach the Court for a review. It launched its application against Letsema on 30 December 2021. This is also the date of the launch of the Swift Application. I deal with the Swift application, next, and the Letsema application, thereafter.

 

 

 

 

SWIFT APPLICATION

SA Tourism’s case against Swift (including submissions)

Introduction

[21] To recap: SA Tourism, essentially, seeks declaration as unlawful, constitutionally invalid and to be reviewed and set aside its decisions taken in February or March 2020 to appoint Swift to execute the International Visitor projects, and repayment by Swift of the monies received pursuant to the appointment either in full or of only profits earned by Swift from the appointment. Swift opposes the relief sought by SA Tourism and, in turn, seeks payment of monies still owing by SA Tourism for services rendered by way of counterapplication. Swift’s claim is opposed by SA Tourism. Next, is a discussion of the highlights of the case by SA Tourism against Swift, including submissions by counsel. In some instances there is an immediate recording of Swift’s answer (or version) to the material statement or issue.

[22] As briefly indicated above, the Swift procurement took off when, on 23 March 2020 during the COVID-19 pandemic, Ms Machado of SA Tourism called Mr Latham of Swift to attend an urgent meeting scheduled for the same day at SA Tourism’s Lonehill offices. Mr Latham is described in the answering affidavit as the chief strategist of Swift. The call was on instruction of Mr Ntshona. Mr Ntshona conducted the meeting, also attended by about forty of his colleagues from SA Tourism. The purpose of the meeting was to request Swift to urgently develop - for SA Tourism - what is already conveniently referred to as International Visitor projects.¹¹ According to Swift, SA Tourism was in the process of developing the International Visitor projects and Swift had no prior knowledge of or involvement in the projects.

[23] Upon acceptance of the request Swift was appointed as provider for the services. Swift says that there was a verbal acceptance of the appointment to undertake the projects at the meeting. The scope of the project had been explained by Mr Ntshona to Mr Latham at the same meeting.

[24] On 31 March 2020, prior to the appointment of Swift as a service provider, Ms Machado of SA Tourism prepared - for Mr Ntshona and Ms Guliwe, the CFO - a ‘request for approval’. The document was unsigned and referred to the International Visitor projects to be implemented through Swift at financial implication (probably cost) in the amount of R783 356. The document sought or ‘recommended’ that the proposal and related costs be approved ‘so that it can be submitted to TBCSA for processing’. SA Tourism rejects - as factually incorrect - the impression created by the so-called ‘request for approval’ that TBCSA was involved in Swift’s appointment and payment of its invoices. TBCSA had nothing to do with Swift’s appointment and the document cannot be used to justify the appointment of Swift without compliance with the Constitution and the SCM policy, SA Tourism asserts.

[25] SA Tourism points out that it is required by section 217 of the Constitution, the provisions of the Public Finance Management Act 1 of 1999 (‘the PFMA’) and its own SCM policy that procurement of goods and services ought to be pursuant to a process which is fair, equitable, transparent, cost-effective and competitive.¹² It is SA Tourism’s case that procurement from Swift did not comply with these statutory and policy requirements, mainly, due to the absence of prior competitive bidding, hence this legality review.

[26] In terms of the principle of legality the Court is required to determine whether SA Tourism had legal authority to take the impugned decisions to appoint Swift to execute the International Visitor projects. SA Tourism contends that it was not authorised by law to appoint Swift and, thus, the decisions to appoint Swift are unlawful and invalid. Once the appointment is declared unlawful and invalid it ought to be set aside. Swift may be ordered to repay the monies it received or only the profits derived from the appointment.

Unlawfulness and/or non-compliance in the appointment of Swift

[27] SA Tourism contends that, for reasons which follow, Swift was unlawfully appointed in respect of International Visitor projects. Mr Ntshona took the decision to appoint Swift without following a procurement process contemplated by the provisions in section 217 of the Constitution, as given effect to by the SCM policy of SA Tourism. As stated above, the appointment of Swift was initiated in terms of instructions given to Ms Machado by Mr Ntshona for her to engage with Mr Latham of Swift. SA Tourism says there was no written and valid agreement between TBCSA and Swift for any of the work done by Swift.

[28] According to SA Tourism, Swift’s appointment ought to have been preceded by a competitive bidding process as required by section 217¹³ of the Constitution and the SCM policy, unless it was intended to address an emergency situation or if Swift was a sole supplier of the material services.¹⁴ It did not. Consequently, Swift’s appointment was unlawful or invalid due to non-compliance with policy and legislation.

[29] An emergency procurement is allowed when there is a serious and unexpected situation that poses an immediate risk to health, life, property or environment, as there would be insufficient time to invite competitive bids. Sole supplier procurement is followed where evidence exists that only one supplier has ‘the unique and singularly available capacity to meet the requirements’ to be met in terms of the intended procurement. SA Tourism’s case is that there was no emergency and Swift is not a proven sole supplier for the material services. Also, such deviation from the SCM policy ought to be approved by the Board of which there is no evidence.

[30] The appointment of Swift was not only unlawful or non-compliant, but was also induced by false representations perpetrated by Mr Ntshona. Swift also laboured under the false impression that it was appointed by TBCSA. Consequently, SA Tourism says that the misrepresentations - in law - entitled it to rescind the appointment of Swift and approach the Court for confirmation of the rescission.

Swift lacked necessary technical capacity to provide the services

[31] SA Tourism also alleges that Swift did not have the necessary technical capacity to provide the services for which it was appointed. To augment this Swift, allegedly, engaged third parties to render the requisite services. This, no doubt, increased the costs of its services, SA Tourism contends. The lack of necessary technical capacity also suggests that Swift would not have cleared ordinary functionality evaluation should SA Tourism have followed a competitive bidding process. This smacks of favouritism impermissible in decision-making processes.

Swift did not do the work for which it was appointed

[32] In addition to alleging outsourcing of the work to third parties, SA Tourism also casts doubt on the performance of the work by Swift. It says that Swift may have not done some or all of the work it was paid for. Reliance in this regard is placed on email exchanges between functionaries of SA Tourism and those of TBCSA in June 2020. This was following a request by SA Tourism to TBCSA to pay an invoice from Swift. The concerns also included that the amount of the first invoice ‘did not match the work that was done’. Further, there are allegations of duplication or appropriation by Swift of the services with those rendered by an entity called Jurni. Therefore, SA Tourism asserts that Swift is not entitled to all monies it already received from SA Tourism and those claimed in the counterapplication.

Conclusion

[33] SA Tourism says for the above reasons or irregularities the decision to appoint Swift ought to be declared unlawful and/or invalid and set aside for want of compliance with section 217 of the Constitution and the SCM policy. Consequentially, Swift ought to be directed to repay the monies received, alternatively, profits earned pursuant to the unlawful appointment, as just and equitable relief by the Court.

Swift’s opposition and counterapplication (including submissions)

Introduction

[34] Swift says that SA Tourism launched this application after receiving a demand for payment. Swift, thus, perceives the application to be motivated by a quest to avoid payment.

[35] Swift criticises the approach taken by SA Tourism in this litigation. Swift bemoans the lack of facts and evidence on critical allegations made by SA Tourism. This is so, despite SA Tourism’s access to investigation reports and to persons with intimate knowledge and personal experience of the material facts due to their involvement in the appointment of Swift, such as Ms Machado. She was involved throughout the process, but appears not to have contributed to the review application beyond her confirmatory affidavit. Instead, SA Tourism utilised a deponent with little or no knowledge of the facts of the matter, Swift charges.

[36] Swift raises what it labelled a preliminary objection. The objection entails that SA Tourism cannot rescind the appointment without a tender of restitution towards Swift. This, Swift argues, would not be feasible as SA Tourism has not established restitution as an applicable remedy. I deal further with the objection, below.¹⁵

Swift’s appointment and services rendered

[37] Swift’s appointment by SA Tourism or its erstwhile CEO, Mr Ntshona, to develop and execute the International Visitor projects was in March 2020. According to Swift the initial agreement between the parties ended during or about January 2021, after work commenced in April 2020. Before completion of the work on the projects, Swift says it was appointed in terms of the SOW 7 agreement to do further work. SOW 7 agreement was finalised on 25 March 2021. The parties had prepared and agreed on final set of Statement of Work documents outlining what work was to be undertaken namely Statement of Work 2 to 5.

[38] Swift disputes SA Tourism’s claim that all employees of SA Tourism were unaware of the irregularities in the appointment, but Mr Ntshona. During the course of the year when the services were being rendered several of SA Tourism’s employees were engaged in one way or another. Also, SA Tourism has intricate checks and balances or expansive procurement process with employees placed in oversight positions within the organisation in order to avoid procurement irregularities and mischiefs, Swift points out. Failure of such safety mechanisms cannot be blamed on Swift. There was also an audit finding or query raised in respect of Swift’s invoice for May 2020 during the annual regulatory audit of SA Tourism by the Auditor General of South Africa in September 2020. But the audit did not raise any supply chain management issues, it is pointed out. Also, SA Tourism’s legal team was said to have been involved regarding the change in scope of the work to be done by Swift. According to Swift some of these employees could have been useful to SA Tourism in this litigation due to their intimate involvement during the execution of the projects.

Swift’s appointment was not unlawful

[39] Swift denies that its appointment was unlawful due to want of compliance with a competitive bidding process and section 217 of the Constitution. The latter provision, Swift argues, does not require a ‘competitive bidding process’. The requirement for a ‘bidding process’ only features in the SCM policy. The policy caters for deviation in case of an emergency. Swift contends that there was an emergency as the appointment or procurement was during the COVID-19 pandemic.

Swift properly rendered the services

[40] Swift admitted that it executed the projects with the assistance of a subcontractor. It explains that the subcontractor was suitably skilled and the core-work was still undertaken by Swift, itself. Besides, appointment of subcontractors in projects of this nature and given the constrained time frames is nothing peculiar, but standard industry practice, it is argued.

Conclusion and counterapplication

[41] Swift says that the application should fail as it was unduly delayed by SA Tourism. The delay should not be overlooked by the Court as it is unreasonable. On the other hand, Swift requests that its counterapplication for SA Tourism to settle the amount of R1 115 500, which remains unpaid despite demand, be granted against SA Tourism. These issues are discussed further below.

LETSEMA APPLICATION

SA Tourism’s case against Letsema (including submissions)

General

[42] SA Tourism seeks similar relief against Letsema to that against Swift, discussed above: (a) that, in law, it is not authorised to take the decisions sought to be reviewed and set aside and, thus this Court is constitutionally bound to declare the decisions and resultant appointments constitutionally invalid and set them aside. And, that the facts that Letsema has rendered services in terms of the unlawful appointments is of no consequence. Further, that, as just and equitable remedy, Letsema should not be allowed to keep the benefits of illegality, and, therefore, it should be ordered to repay the monies received pursuant to the unlawful appointments.

Unlawful Appointment

General

[43] Letsema’s appointments were in March and August 2020, as stated above. Mr Ntshona, as the then CEO of SA Tourism, decided to appoint Letsema to render the impugned services. There was no prior competitive procurement process as contemplated in section 217 of the Constitution.

First appointment (i.e. the Recovery Plan)

[44] Letsema’s first appointment came in March 2020. It was preceded by discussions between Mr Ntshona and Mr Harris of Letsema. A proposal from Letsema was made around 30 March 2020. It related to the Recovery Plan, referred to above.¹⁶ Letsema’s fee for the work to be done in terms of the proposal was stated to be R1 059 700 per month for a period of three months.

[45] It is common cause that Letsema’s proposal was not preceded by an open or public bidding process involving other prospective bidders. SA Tourism says Letsema, with experience in public procurement, knew that the process followed for its appointment was unlawful. Letsema, nevertheless, participated in the process and accepted the appointment, before rendering services pursuant to the appointment, even without a written agreement. Only towards the end of 2020 did Letsema, belatedly, start engaging with SA Tourism about the conclusion of a written agreement, despite commencing work already in April 2020.

Second appointment (i.e. EPMO)

[46] Another decision which SA Tourism seeks reviewed and set aside concerns the second appointment of Letsema for the services or a project called EPMO, as briefly discussed above.¹⁷ This, also, was in March 2020 following discussions between Letsema’s Mr Harris and SA Tourism’s Mr Ntshona and his colleague, Mr Dlamini, the COO. Letsema was paid a total amount of R2 313 725, 60 for the EPMO services.

[47] SA Tourism points out that Letsema’s proposal for the project does not shed light on why its appointment for the EPMO was necessary. Also, no needs assessment was conducted by SA Tourism to determine the specific requirements of SA Tourism in this regard.

Third appointment (i.e. SIA)

[48] In August 2020 Letsema received a third appointment to provide what was referred to as Institutional Architecture Program. But, according to Letsema the ‘Institutional Architecture’ was the fourth appointment or project relating to an evaluation on how SA Tourism needed to transform so that it could be aptly equipped to play a lead role in the recovery of the tourism sector. Nothing really turns on this. This appointment was also preceded by discussions between Mr Harris and Mr Ntshona.

[49] SA Tourism says even with this appointment it was not very clear what Letsema was appointed to do. Explanation of the background by Letsema include references to ‘Strategy Insights and Analytics’ (‘SIA’) created in 2016/17 and SIA being ‘responsible for a co-suite of research, intelligence and analytical products’. Letsema refers to this as ‘Intelligence and Analytics’. According to Letsema’s proposal, it were to offer support, including in dedicating a composite team to SIA to provide consulting and training or capacity building. SIA was to be responsible for determining the team’s level of involvement. But according to SA Tourism there was no ‘needs assessment’ conducted to determine whether it required the services proposed by Letsema. Letsema was paid R3 864 000 in respect of the third appointment.

Conclusion

[50] SA Tourism says these appointments were unlawful and should be set aside. Consequently, Letsema should be ordered to repay the R10 130 269, 59 it received pursuant to the appointments or the profits earned.

Letsema’s opposition (including submissions)

General

[51] Letsema describes itself as a black-owned company founded in 1996. It considers itself as one of ‘the leading and most reputable consultancy companies’ in SA. Its clients include state-owned entities in SA and beyond, as well as international organisations and private sector entities.

[52] Letsema reminds us all that the tourism industry in SA was one of the economic sectors hit the hardest by the COVID-19 pandemic. The adverse effects of the pandemic included risks to thousands of businesses and jobs in the sector. This included a national ‘lockdown’ declared by the President of SA, which was effective from 26 March 2020.

Appointment for the Recovery Plan

[53] According to Letsema, its partner, Mr Harris, was contacted by Mr Ntshona of SA Tourism in March 2020 regarding submission of a proposal for the Recovery Plan. Mr Harris understood the engagement or development of the Recovery Plan to have been under the strategic partnership between SA Tourism and TBCSA. The latter was the party with whom Letsema was to conclude a contract and to be responsible for payment for the services rendered by Letsema. Mr Harris and/or Letsema had no reason to doubt this arrangement or assurances that funding would be from the private sector (in the form of tourism levies to be appropriated by TBCSA to SA Tourism) and not from the public purse. Under this scenario, no competitive bidding process was necessary. Letsema submitted its proposal and was appointed to develop the Recovery Plan.

Appointment in respect of the EPMO and, possibly, other projects

[54] Letsema says whilst it was busy with the development of the Recovery Plan the need was identified for the development and implementation of the EPMO. Consequently, Letsema was appointed to set up and operate the EPMO, primarily intended to develop a new business function for SA Tourism, and other related projects. These projects, according to Mr Ntshona, fell within the ambit of the strategic partnership agreement between TBCSA and SA Tourism, Letsema asserts. Letsema, it is pointed out, was not privy to the internal arrangements between SA Tourism and TBCSA. There were other projects for which Letsema was appointed in similar manner to the Recovery Plan and EPMO, just discussed.

Services, payment and the draft service level agreement

[55] The projects were implemented simultaneously. Letsema submitted invoices to TBCSA for services rendered and the invoices were paid by TBCSA. Letsema says that it incessantly ‘pressed the need for a service level agreement’ with TBCSA through repeated emails by Mr Harris to SA Tourism. This pressing bore some fruit when - on 30 October 2021 - Letsema was given a draft service level agreement by SA Tourism. The draft was intended to be a ‘tripartite consulting services agreement’ between SA Tourism, Letsema and TBCSA. But this unravelled because the draft agreement mentioned that Letsema was appointed pursuant to a tender process. Letsema found this problematic and requested this or any reference to a tender process to be deleted. The draft agreement was presented for signature on 23 February 2021, but appears to have been impeded by the events discussed next.

 

Misrepresentations by SA Tourism or its then CEO

[56] On 26 February 2021 an e-mail was received by Letsema from TBCSA’s finance and administration section making, according to Letsema, a ‘startling claim’ that Letsema was never appointed to provide services to TBCSA. TBCSA, in the e-mail, also requested that thenceforth all invoices be addressed to SA Tourism and not TBCSA. Letsema says this explains why it laboured under the belief that the services it rendered were to TBCSA. After all, its invoices were submitted to TBCSA and were paid by this entity.

[57] Letsema says that it was misled by SA Tourism. SA Tourism acknowledged that its then CEO, Mr Ntshona, falsely represented to Letsema that it was appointed by TBCSA. SA Tourism, itself and its EXCO were also misled by the misrepresentations by Mr Ntshona that Letsema’s appointments were made by and will be funded by the TBCSA.

[58] Overall, it is argued that, for the above grounds, SA Tourism is not entitled to rescind the agreement with Letsema on the basis of the same false representations by its own CEO. A party who induced a contract by making false representations is not entitled to rescind the contract on the ground that it made false representations. The correct legal position is that a material misrepresentation gives rise to a right to rescission at the instance of the party to whom the misrepresentation was made, not the other way round, the argument on behalf of Letsema concludes.¹⁸

APPLICABLE LEGAL FRAMEWORK OR PRINCIPLES

[59] Various legal principles are implicated in these applications. Some of these principles have already been referred to above. It is vital for some of the legal principles to be reflected in greater detail than others to facilitate the discussion and determination of the relevant issues in the applications, to follow.

[60] These are legality reviews. There is clear and unequivocal authority by the Constitutional Court that an organ of state seeking to review its own decisions ought to do so in terms of the principle of legality.¹⁹

[61] The parties in these matters do not agree that the reviews have been brought in terms of the conventional Rule 53.²⁰ In fact, it is SA Tourism which asserts that the reviews were brought in terms of Uniform Rule 6, the general rule for applications. Although this issue was not prominent during argument it is important that it be dealt with in this judgment. The issue finds greater significance when one considers that Rule 53 specifically requires that a record of the decision or proceedings subject of review should be filed.²¹ I return to this below and expatiate on the applicable legal principles.

[62] Section 217(1) of the Constitution provides for procurement of goods and services as follows:

When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.

 

[63] The above Constitutional provision is given effect to by section 51(1) of the PFMA as follows:

An accounting authority for a public entity-

(a) must ensure that that public entity has and maintains-

(i) effective, efficient and transparent systems of financial and risk management and internal control;

(ii) a system of internal audit under the control and direction of an audit committee complying with and operating in accordance with regulations and instructions prescribed in terms of sections 76 and 77; and

(iii) an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective;

(iv) a system for properly evaluating all major capital projects prior to a final decision on the project…

 

[64] Section 22 of the Tourism Act provides that the PFMA applies to SA Tourism. In turn, SA Tourism is listed as a public entity in schedule 3 of the PFMA. This means that the provisions of the PFMA relevant to the procurement of goods and services apply to SA Tourism.

[65] SA Tourism, in compliance with section 51(1)(a)(iii) of the PFMA quoted above, adopted a supply chain management policy (i.e. the ‘SCM policy’). It brooks no argument that SA Tourism is required to give effect to or comply with the SCM policy when it procures goods and services.²² The objectives of the SCM policy include prevention of abuse of supply chain management systems and unauthorised, irregular, fruitless or wasteful expenditure.

[66] In Steenkamp NO v Provincial Tender Board, Eastern Cape²³ Moseneke DCJ held as follows regarding section 217 of the Constitution:

Section 217 of the Constitution is the source of the powers and function of a government tender board. It lays down that an organ of State in any of the three spheres of government, if authorised by law may contract for goods and services on behalf of government. However, the tendering system it devises must be fair, equitable, transparent, competitive and cost-effective. This requirement must be understood together with the constitutional precepts on administrative justice in s 33 and the basic values governing public administration in s 195(1). [footnote omitted]

 

[67] Just over a year later, Jafta JA (as he then was in the SCA) in Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others²⁴ (‘Millennium Waste’) expounded on the provisions of section 217 of the Constitution as follows:

The final Constitution lays down minimum requirements for a valid tender process and contracts entered into following an award of tender to a successful tenderer (s 217). The section requires that the tender process, preceding the conclusion of contracts for the supply of goods and services, must be 'fair, equitable, transparent, competitive and cost-effective'. Finally, as the decision to award a tender constitutes administrative action, it follows that the provisions of the Promotion of Administrative Justice Act (PAJA) apply to the process. This is the legislative background against which the present matter must be considered.

 

[footnotes omitted]

 

[68] Section 172 of the Constitution provides for powers of the Courts, including as follows:

(1) When deciding a constitutional matter within its power, a court – (a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency…

 

[69] Section 172(1)(a) of the Constitution was applied in Gijima to the effect that the Court is enjoined by the provision to declare invalid any law or conduct that it finds to be inconsistent with the Constitution, where it was stated:

We concluded earlier that, in awarding the [Department of Defence] agreement, Sita acted contrary to the dictates of the Constitution. Section 172(1)(a) of the Constitution enjoins a court to declare invalid any law or conduct that it finds to be inconsistent with the Constitution. The award of the contract thus falls to be declared invalid.²⁵ [footnote omitted]

 

[70] Still in Gijima, the Constitutional Court decreed that ‘self-review’ by a state organ must be brought not in terms of the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’) but in terms of the principle of legality, as follows:

What we glean from this is that the exercise of public power which is at variance with the principle of legality is inconsistent with the Constitution itself. In short, it is invalid. That is a consequence of what s 2 of the Constitution stipulates. Relating all this to the matter before us, the award of the [Department of Defence] agreement was an exercise of public power. The principle of legality may thus be a vehicle for its review. The question is: did the award conform to legal prescripts? If it did, that is the end of the matter. If it did not, it may be reviewed and possibly set aside under legality review.²⁶ [footnote omitted]

 

ISSUES REQUIRING DETERMINATION

General

[71] Both applications are in the form of a legality review, as already stated. The principle of legality requires that public power be exercised within the lawfully conferred authority by a holder of such power.²⁷ The principle of legality is ‘an incident of the rule of law’²⁸ and a founding value of the Constitution.²⁹ Effectively, the principle of legality serves as a constitutional mechanism for controlling the exercise of public power.³⁰

[72] What appears above suggests that the central or principal issue to be determined for the disposal of the two matters before the Court put, simply, is whether the ‘procurement’ of services from Swift or Letsema by SA Tourism complied with the law. Other issues in the discourse are ancillary to this principal issue.

[73] To facilitate the discussion I will segment the principal issue, identified above. I consider the following as the segmented issues to be determined for the disposal of the two matters: (a) whether the procurement involving Swift or Letsema complied with the law and SA Tourism’s SCM policy, or ought to be set aside for being unlawful and invalid; (b) in the event that the answer to (a) is in the negative, declaration whether or not payments made by SA Tourism to Swift or Letsema pursuant to the appointments are unlawful; (c) whether Swift or Letsema ought to be directed to repay SA Tourism the full amount paid pursuant to the appointments, alternatively, to repay only profits earned pursuant to the appointments, together with interest which may accrue or have accrued; (d) whether or not there was unreasonable delay on the part of SA Tourism in bringing the reviews, and (e) whether Swift is entitled to payment in terms of its counterapplication. In addition to these issues, the following are further issues requiring discussion and/or determination: (f) whether the reviews are in terms of Uniform Rule 6 or 53, and (g) Swift’s preliminary point or objection that rescission of its appointment due to unlawfulness must be accompanied by restitution in favour of Swift.

[74] No doubt, there will be other issues, not necessarily specified above which may seep into the discussion of the specified issues or above rubrics. Also, overlaps and necessary repetition are unavoidable.

Legality review, Rules 6 and 53, and the review record

[75] It is argued on behalf of SA Tourism that the reviews are not in terms of Rule 53,³¹ but Rule 6. The significance of the rule utilised is vital for purposes of the delivery of ‘the record of such proceedings [or decision] sought to be corrected or set aside’ required under Rule 53(1)(b).³²

[76] The learned author of Erasmus: Superior Court Practice³³ restates the principle that the primary purpose of Rule 53 is to facilitate and regulate applications for review.³⁴ In its quest to be facilitative, the Rule does not serve to constrain an applicant in adherence to its provisions.³⁵ The requirements of Rule 53 with regard to the relief set out in the notice of motion and supported by the facts in the founding affidavit applicable to review applications, are in pari materia (‘in an analogous case; concerning a similar subject’)³⁶ with those under Rule 6(1).³⁷ The procedure under rule 6 have been adapted to cater for the special exigencies of a review application by way of a notice of motion.³⁸ Our courts have recognised that Rule 53 plays a vital role in enabling a court to perform its constitutionally entrenched review function.³⁹

[77] SA Tourism’s view is that the review was brought in terms of Rule 6 and, thus, no record has to be filed. Letsema rejects this assertion. Counsel for Letsema argued that all reviews ought to be brought under Rule 53. SA Tourism chose to label the application Rule 6 review merely to deprive Letsema (and by necessary extension Swift) of the procedure and substantive safeguards that are the very reason for the existence of Rule 53.

[78] SA Tourism’s other leg of the argument on the delivery of the record is that, all documents considered relevant in relation to the decisions being reviewed are attached to the review applications. This is disputed. Letsema points out that, for example, there is no single minute, record or note of meetings where the impugned decisions were made. Letsema disputes that SA Tourism as a party to the impugned decision is entitled to decide what documents are relevant to the decisions and to be disclosed, as this would defeat the purpose of Rule 53. I agree.

[79] One does not really have to pigeonhole a judicial review into the Rules of Court. That would equate to elevating form over substance. It is logical that the Court or judge seized with a review requires to have access to the full record in order to perform its or his constitutionally entrenched review function.⁴⁰ Also, other parties to the review proceedings are entitled to the record to meaningfully exercise their constitutional right to a fair hearing.⁴¹

[80] I do not consider it necessary to decide whether the reviews should have been brought in terms of Rule 53 or not. I agree with counsel for Letsema that the delivery of a record in a self-review, strictly speaking, may be impractical in terms of the procedure of Rule 53. But, there is nothing equivocal about the need to have all documents relating to the decision to be reviewed placed before the Court. There is no sieving prerogative on the part of the applicant or decision maker as to what is to be included or excluded. But, should a determination be necessary on whether a document ought to be included in the record or not such decision cannot be exclusive to the applicant or the self-reviewing organ of state, lest it is subjective and partisan. In the first place all documents have to be disclosed before a determination whether to include or exclude them from the record can properly be made. There cannot be a proper discussion about documents (or their content) if those documents are only known to one of the parties. Exclusion of documents, for example, on the basis of relevance may be by agreement between the parties, absent which the interlocutory and case management rules or directives of the Court may be utilised to resolve the disagreement or dispute.

[81] A self-review is premised on the principle of legality. The supremacy of the law is overarching and extends to the disclosure of the documents, lest the impropriety which brought about the self-review is perpetuated. I agree with counsel for Letsema that shielding the impugned decisions and/or the processes followed in reaching the decisions from review by placing the record outside of the realm of the judicial review affects an opposing party’s right of access to the Court and deprives such party of equality of arms when appearing before the Court.

[82] SA Tourism ought to have filed a complete record. I commend Letsema and Swift for having tried their earnest to press for the filing of the entire record. But when all courteous and informal measures failed, they should have gone further, to the extent that they were so minded or advised, and invoked the Rules and directives of this Court to formally compel for the furnishing of the record. This, actually, was taunted by SA Tourism when it told one of the respondents that they should bring an application to compel the delivery of the record. Such an approach doesn’t befit a litigant statutorily enjoined to shrewdly guard the public purse. State litigants (due to their perceived or real financial muscle) should not try to gain advantage over other litigants by unnecessarily calling for litigation when simple rationality should prevail.

Unreasonable delay?

General

[83] In Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd (‘Buffalo City’)⁴² the Constitutional Court held that the period within which a legality review is to be brought is not fixed, in contrast with a review brought under PAJA.⁴³ But a legality review or ‘self-review’ by an organ of state ought to be within a reasonable time in terms of the common law.⁴⁴

[84] Both Swift and Letsema say that SA Tourism failed to bring the reviews within a reasonable time or without undue delay. This is disputed by SA Tourism.

[85] When considering whether a legality review has not been unduly delayed the Court has to apply the two-step test or approach in Khumalo v Member of the Executive Council for Education, KwaZulu Natal (‘Khumalo’)⁴⁵ crafted specifically for legality reviews, as follows:⁴⁶

[85.1] first, the reasonableness of the delay ought to be assessed, among others, against the explanation offered for the delay.⁴⁷ This is a factual enquiry upon which a value judgment is made against the circumstances of a matter. The explanation for the delay ought to cover the entire period of the delay.⁴⁸ The clock starts ticking from the date on which an applicant became aware of or reasonably ought to have become aware of the action taken.⁴⁹ A delay which is explained and justified is reasonable. The absence of an explanation for the delay would necessarily render the delay unreasonable.⁵⁰ Should the delay be found reasonable, then the matter could be heard, and the second step falls away.⁵¹

[85.2] secondly, where the delay is found to be unreasonable, it is for the Court to determine whether notwithstanding the unreasonable delay the Court should exercise its discretion to overlook the delay and entertain the application.⁵² This would be if considerations based on the interests of justice require that the unreasonable delay be overlooked.⁵³ There ought to be a basis for a court to exercise its discretion to overlook the delay,⁵⁴ either gleaned from the facts made available or objectively available factors.⁵⁵

[86] The approach to overlooking a delay in a legality review is flexible⁵⁶ and is against the ‘factual, multi-factor, context-sensitive framework’,⁵⁷ which entails a legal evaluation which considers a number of factors such as the potential prejudice to the affected parties and the possible consequences of setting aside the impugned decision.⁵⁸ The latter two factors may in certain circumstances be ameliorated by the power of the Court to grant a just and equitable remedy.⁵⁹

[87] Another relevant factor to be considered when overlooking delay is the nature of the impugned decision.⁶⁰ This factor essentially requires that the merits of the legal challenge against the decision be considered.⁶¹ The nature and extent of the illegality or the unlawfulness of a contract may be a crucial factor when determining the relief to be granted in a delayed review.⁶²

[88] A further factor to be considered when determining whether to overlook delay is the conduct of the applicant in the matter, especially state litigants. The latter often are best placed to explain the delay⁶³ and they are subject to a higher duty to respect the law.⁶⁴ It is the duty of state litigants to rectify unlawful decisions and they should be exemplary when seeking to rectify unlawfulness.⁶⁵

[89] But the proverbial horse does not bolt for a state functionary who has not acted as a ‘model litigant’ or ‘constitutional citizen’,⁶⁶ as there may be a basis to overlook the delay if such functionary had acted in good faith or with the intent to ensure clean governance.⁶⁷

[90] The abovementioned principles are applied to the facts of these matters using the two-step test or approach in Khumalo.⁶⁸

Reasonableness of the delay in bringing the Swift application and the Letsema application

[91] SA Tourism says it learned of the irregularities in December 2020. On 07 January 2021, the Board requested internal audit to provide a report. The report was furnished on 27 March 2021.

[92] Swift, and possibly Letsema, queries why it took three months to obtain the audit report and place it before the Board. This is a fair question and I will deal with it later.

[93] From the audit report, the Board is said to have become aware of the appointments of Swift and Letsema. On 31 March 2021, the Board resolved to conduct a forensic investigation on the transactions. It ought to be borne in mind that at all these times (i.e. December 2020 to 31 March 2021) Mr Ntshona was still the CEO. There is no explanation as to how these activities came about or the Board got to be involved, given Mr Ntshona’s alleged iron grip.

[94] The forensic investigation report became available in August 2021, almost five months after the Board called for it. The report has not been shared with the Court or Letsema and Swift. Its immense size or volume is said to make it non-portable, modern electronics abound. Another reason given is that the report is irrelevant to the relief sought.⁶⁹

[95] I must immediately say that if the report is irrelevant then, perhaps, it was unnecessary for purposes of these reviews. This would mean that SA Tourism shouldn’t have waited for the report to become available before bringing the reviews. The reviews could have been launched immediately after March 2021 when the Board became aware of the appointments of Swift and Letsema. But SA Tourism still waited for legal advice obtained in October 2021. If the legal advisors relied on the report for their advice that employees be disciplined and the reviews be brought, then the report cannot be irrelevant to these reviews, as SA Tourism – with respect – would like everyone to believe.

[96] Back to the timelines. Swift also points out that the Board is said to have become aware of the irregularities pursuant to the internal audit report on 27 March 2021 but waited nine months to bring the applications in December 2021. Swift and Letsema actually say the delay ought to be computed from around February/March 2020 and not a year later on 27 March 2021. They argue that the resultant delay is unreasonable.

[97] SA Tourism denies any unreasonable delay in bringing both reviews. It ought to be remembered that SA Tourism says it couldn’t have brought the application whilst Mr Ntshona was still in its employ as the CEO. This does not make sense as the Board was seized with the issues as early as January 2021. On SA Tourism’s version the Board was in charge of the matters. Nowhere does Mr Ntshona feature in the explanation for the delay thenceforth.

[98] The portrayal of Mr Ntshona as some sort of a despot, singlehandedly, ruling SA Tourism by fiat may be serving a convenient purpose in the advance of these applications, but does not place those who served with him in SA Tourism’s EXCO in a better light. There is no justification for them having allowed Mr Ntshona to run SA Tourism like his private fiefdom, as alleged. Mr Ntshona’s role, powers and functions ought to have been statutorily and contractually defined. SA Tourism is specifically mandated, with the concurrence of the Minister, to appoint a chief executive officer ‘responsible for the efficient management of [its] business and affairs’ and performance of SA Tourism’s delegated or assigned functions.⁷⁰ It behoved the other EXCO members to have actively taken steps to bring to a halt the transgressions and not to have turned a blind eye when the Constitution and the SCM policy were being breached or to have cowered into a sea of indifference. This type of conduct, clearly, does not befit a person occupying a senior or executive management position. Positions at that level may equate to that of a director of a company. Our company law requires that directors act in the best interests of the company.⁷¹ A director (defined as including ‘any person occupying the position of a director or alternate director, by whatever name designated’)⁷² does not serve the interests of a fellow director or manager, even if the latter is in a higher position. Ultimately, such conduct is self-serving and aimed at protecting or serving one’s personal interests above those of the employing organisation. I have noted the outcome of the disciplinary steps reported to have been taken by SA Tourism against the senior employees found to have been implicated in the transgressions. All I can say – with respect - is that the punishment meted out does not bear the hallmarks of the relief sought against Swift and Letsema, identified as the external role-players in the transgressions, in these reviews.

[99] There is a submission that the delay should be explained in most of the appointments or transactions from March 2020 when the appointments were made. I agree that the clock starts ticking from the date on which an applicant became aware of or reasonably ought to have become aware of the action taken.⁷³ But, despite my concerns about apathy of the other members of SA Tourism’s EXCO in allowing Mr Ntshona to have his way with the material business and affairs of SA Tourism, as explained, I would accept (from the perspective of SA Tourism) that the reviews couldn’t have been brought prior to 07 January 2021. This part of the delay is satisfactorily explained.

[100] However, I am dissatisfied with the period of almost three months it took for the internal audit report to be furnished.⁷⁴ But, I will still accept that the Board did what it should have under the circumstances in getting the audit report on 27 March 2021. The audit report informed the Board of the appointments of Swift and Letsema.

[101] I turn my attention again to the investigation report. It should be borne in mind that according to SA Tourism these proceedings are not based on the outcome of the forensic investigation. The appointments were already known to the Board from the internal audit report. SA Tourism was from then in a position to subject the impugned decisions to judicial review. Or, if it had any doubt, it could have acquired legal advice on the judicial reviews, as it later did. I accept that the acquisition of legal advice by the Board was necessary and that the length of time it took to be furnished was reasonable. On these facts, then, this application could have been brought about six months earlier around July 2021. Therefore, on this analogy SA Tourism delayed by about six months before launching the review applications against Swift and Letsema.

[102] On this approach there was a six months’ delay in bringing the review applications. The period is constituted out of nine months which lapsed between the audit report to the date of issuing of these applications (i.e. April to December 2021), less a period of about three months when it is said SA Tourism acquired legal advice after obtaining the forensic report (August to October 2021). I have accepted the length of time for obtaining legal advice, but not for obtaining legal advice on the forensic report. I reiterate that the forensic investigation may have been necessary for other purposes of SA Tourism but not these review applications. The Board could have obtained legal advice after the audit report.

[103] In my view the six months delay is not unreasonable. It is the result of a discounting exercise (i.e. of an activity which I considered unnecessary): the forensic investigation. But there was nevertheless an explanation for the delay, which cannot be said to be inadequate.⁷⁵ I proceed to determine whether the decisions to appoint or the appointment of Swift and Letsema were lawful.

Whether the procurement involving Swift is unlawful (plus preliminary objection)

Swift’s preliminary point or objection based on principles of restitution

[104] Swift, as stated above, raised a preliminary point or objection that rescission of its appointment on the basis that it is unlawful ought to be accompanied by restitution (presumably of an equivalent in monetary value of the services rendered) towards Swift. Swift argues that the relief for rescission of its appointment by SA Tourism on grounds that it was unlawful ought to be accompanied by a tender or offer of restitution towards Swift.⁷⁶

[105] I do not view the preliminary point or objection as capable of having the same effect as a point in limine⁷⁷ to be dispositive of the material issues. And even if it does, in this legality review the end result is relief deemed by the Court to be just and equitable. Such a conclusion would naturally include consideration of the performance and counter-performance by the parties in the impugned transactions and their legitimate interests. Therefore, whether restitution is applicable or not will form part of the general considerations of a just and equitable relief and will not be decided separately.

Whether the Swift procurement is lawful?

[106] The procurement of the services of Swift started with a telephone call on 23 March 2020, followed by a meeting on the same day between Mr Latham and Mr Ntshona (and about forty of his colleagues) at which the former was offered the International Visitor projects, which he accepted and Swift was appointed as a service provider. There is no doubt that there was no competitive bidding process prior to the appointment. This, no doubt, is contrary to section 217 of the Constitution, the PFMA and the SCM policy, all requiring procurement of goods and services to be in terms of a process which is fair, equitable, transparent, cost-effective and competitive.⁷⁸ Therefore, outside of this legal framework, SA Tourism lacked the legal authority to appoint Swift and procure the impugned services.

[107] To arrive at that conclusion, I have rejected Swift’s contention that the COVID-19 pandemic constituted an emergency for the procurement. There is no evidence of a valid or authorised deviation by the Board from the SCM policy.⁷⁹

[108] Also, the misrepresentations by Mr Ntshona may have misled Swift on the validity of the procurement or its appointment, but Mr Ntshona did not pretend the process was competitive. The involvement of TBCSA or the impression created of its involvement does not detract from my conclusion in this regard. The same conclusion is reached regarding the other appointment or procurement involving Swift.⁸⁰ Therefore, the decisions to appoint Swift was unlawful and invalid and would be set aside for want of compliance with section 217 of the Constitution and the SCM policy. I turn, next, to Letsema’s appointments.

Whether the procurement involving Letsema was unlawful?

[109] The procurement or appointments involving Letsema were also instigated by Mr Ntshona during March and August 2020, as the then CEO of SA Tourism. The first appointment of Letsema in March 2020 was preceded by discussions between Mr Ntshona and Mr Harris of Letsema and consummated with a proposal by Letsema around 30 March 2020 for the services relating to the so-called Recovery Plan. There is no doubt that the proposal was not preceded by competitive bidding. There was also no such bidding with the other appointments of Letsema.

[110] The requirement for a competitive procurement process was well-known to Letsema. Letsema, on its own version, is no stranger to procurement of this nature as it boasts amongst its clients state-owned entities in SA, including SA Tourism, and beyond. I am not saying this is a requirement, but merely illustrate the point that the absence of a competitive process ought to have discouraged Letsema to get involved, as long as the process remained as such. Whether the procurement involved a ‘strategic partnership’ between SA Tourism and TBCSA does not alter its anticompetitive nature and lack of compliance with the applicable statutory and policy regime in other respects. The so-called ‘assurances’ given by Mr Ntshona to Mr Harris of Letsema that funding in the form of tourism levies to be appropriated by TBCSA to SA Tourism does not involve a public purse is of no moment. The monies used to settle Letsema’s invoices were destined for and belonged to SA Tourism. My views regarding the so-called ‘assurances’ apply to the false representations by Mr Ntshona to Swift. A competitive bidding process was always necessary. The appointments of Letsema were unlawful due to their non-compliance with section 217 of the Constitution and the SCM policy. They will be set aside. Letsema’s counsel submitted that their client accepts that if the Court concludes that SA Tourism acted contrary to the dictates of the Constitution in appointing Letsema the decision falls to be declared invalid. The concession was deservedly made.

Just and equitable relief in the Swift and Letsema applications

[111] Section 172(1)(b) of the Constitution provides this Court wide remedial powers upon making a declaration of invalidity. The remedial powers include an order granting just and equitable relief.

[112] SA Tourism’s case is that once the appointments of Swift and/or Letsema are set aside, an order ought to follow directing Letsema and/or Swift to repay the monies paid to them in terms of the unlawful appointment. A relief in these terms, according to SA Tourism, would be just and equitable. As an alternative, the Court should direct Letsema and/or Swift to repay only profits earned pursuant to the appointments, together with interest thereon. The Court, it is submitted on behalf of SA Tourism, should not allow either of these service providers to benefit from their participation in the unlawful appointments, lest efforts to rid the public sector of unlawful procurement contracts, is frustrated.

[113] In granting just and equitable relief the following principles serve as a guide:⁸¹

The apparent anomaly that an unlawful act can produce legally effective consequences is not one that admits easy and consistently logical solutions. But then the law often is a pragmatic blend of logic and experience. The apparent rigour of declaring conduct in conflict with the Constitution and PAJA unlawful is ameliorated in both the Constitution and PAJA by providing for a just and equitable remedy in its wake. I do not think that it is wise to attempt to lay down inflexible rules in determining a just and equitable remedy following upon a declaration of unlawful administrative action. The rule of law must never be relinquished, but the circumstances of each case must be examined in order to determine whether factual certainty requires some amelioration of legality and, if so, to what extent. The approach taken will depend on the kind of challenge presented – direct or collateral; the interests involved and the extent or materiality of the breach of the constitutional right to just administrative action in each particular case.

[footnotes omitted]

[114] Letsema submits that the order sought by SA Tourism as just and equitable remedy is extremely unusual in that SA Tourism wants its money back which it already paid for the work done by Letsema whilst retaining the benefits of the work for free. This amounts to forfeiture of the payments already received and still to be received. This type of order, counsel for Letsema submitted, is only feasible where the Court is satisfied that Letsema was the cause of the irregularities and that SA Tourism was innocent of the irregularities. This is not borne by the facts of the matter, including the acknowledgement by SA Tourism that its CEO made false representations to Letsema and SA Tourism itself. Also, value for money was received in respect to the services rendered by Letsema. These submissions are significantly repeated by counsel for Swift. They are denied by SA Tourism, which considers both Swift and Letsema no innocent bystanders, but active participants in the unlawful procurement process, worthy of being deprived benefits from their respective procurement processes.

[115] I agree that requiring full repayment of the monies paid to either Swift or Letsema would not equate to just and equitable relief. I think the alternative relief suggested by SA Tourism that a just and equitable order will be the one in terms of which Swift and Letsema are paid only reasonable costs for the services rendered, but not earn ‘profit’ from the unlawful appointments.⁸²

[116] Therefore, both Swift and Letsema will be directed to produce proof of incurring reasonable costs in the form of supporting vouchers to enable a determination by the Court or in terms of its directions regarding what the net profit which ought to be repaid to the SA Tourism. The exercise may require that the financial affairs of Swift and Letsema be independently reviewed or audited to ascertain the exact profits (i.e. the amounts in excess of reasonable costs of rendering the impugned services) earned from the now proven unlawful appointments.

[117] I also find that Swift has established its claim in terms of the counterapplication for payment in the amount of R1 115 500, subject to what I have to say next. However, this amount would also be subjected to the process to be ordered applicable to the amounts already received by Swift. In other words, Swift would be entitled to be paid only reasonable costs of rendering the impugned services related to the outstanding amount.

CONCLUSION AND COSTS

[118] SA Tourism, no doubt, is successful in both applications. Under normal circumstances it is entitled to costs. The Court is urged to consider that Letsema and Swift have been exercising their constitutional rights against an organ of state and the litigation also spawned from SA Tourism’s own failure to meet its constitutional and statutory responsibilities. Therefore, the well-established Biowatch principle is applicable.⁸³ I agree.

[119] But the Biowatch principle notwithstanding, the lamentation of the Court regarding the non-disclosure of the forensic investigation report and the withholding of the record constituted by all documents relating to the impugned decisions subjected to review, are relevant to the issue of costs. The non-disclosure or withholding of the documents - on what I, respectfully, consider less than satisfactory grounds, would have loomed large in my mind on deciding the issue of costs. For, when an organ of state approaches the Court on a legality review, it is vindicating the rule of law. And in so doing it ought to ensure that transparency and openness prevail in every aspect of its attempt to reclaim its interests from the clutch of unlawfulness. The latter quest is not assisted by tactical litigation which, perhaps, is commonplace in other forms of litigation.

[120] A ruling is also required in respect of the costs of the non-joinder application or argument in this regard and the consequential postponement of both applications on 21 November 2023. These costs were reserved by the Court for later determination. A proper ruling here will also be that each of the parties be responsible for its own costs.

ORDER

 

[121] In the premises, in the matter between South African Tourism Board and Swift Thinking (Pty) Ltd and another under Case Number: 64333/21, I make the order, that:

a) the decision taken by the applicant in February 2020 or in March 2020 to appoint the first respondent to execute the International Visitor Tracking Portal, the TechHub and the COVID Tracking and Data Capture Support Programme projects, including related projects, is declared unlawful, constitutionally invalid and it is reviewed and set aside;

b) the appointment which came into existence pursuant to the decision in a) hereof to appoint the first respondent is declared unlawful and constitutionally invalid and is set aside;

c) it is declared that no lawful agreement came into existence between the applicant and the first respondent pursuant to the decision in a) hereof or appointment in b) hereof;

d) subject to f) hereof, it is declared that payments made by the applicant to the first respondent pursuant to the appointment in b) hereof are unlawful;

e) subject to f) hereof, the applicant is liable to make payment to the first respondent in the amount of R1 115 000,00;

f) as just and equitable remedy:

i) it is declared that the payments made by the applicant to the first respondent pursuant to the appointment in b) hereof in the amount of R8 169 109,40 should not include monies representing profits on the payment received from the appointment;

ii) the first respondent is directed to provide the applicant with a detailed breakdown of its reasonable expenses with supporting vouchers relating to the monies received by the first respondent from the applicant and monies claimed by the first respondent from the applicant in terms of the counterapplication, pursuant to the appointment in b) hereof and file same with this Court within sixty (60) days from the date of this order;

iii) the applicant shall, within thirty (30) days thereafter, verify the details provided by the first respondent under ii) hereof and file the verification with this Court;

iv) this Court will thereafter determine the amount to be paid by the first respondent to the applicant, and the amount to be paid by the applicant to the first respondent in terms of the first respondent’s counterapplication.

e) each party shall be responsible for its own costs, including costs occasioned by the joinder of the second respondent and postponement of the application on 21 November 2023.

 

[122] In the premises, in the matter between South African Tourism Board and Letsema Consulting and Advisory (Pty) Ltd and another under Case Number: 64334/21, I make the order, that:

a) the decisions taken by the applicant in March and in August 2020 to appoint the first respondent as a service provider are declared unlawful, constitutionally invalid and are reviewed and set aside;

b) the appointments which came into existence pursuant to the decisions in a) hereof are declared unlawful and constitutionally invalid and are set aside;

c) subject to d) hereof, it is declared that payments made by the applicant to the first respondent pursuant to the appointment in b) hereof are unlawful;

d) as just and equitable remedy:

i) it is declared that the payments made by the applicant to the first respondent pursuant to the appointments in b) hereof in the amount of R10 130 269, 59 should not include monies representing profits on the payment received from the appointment;

ii) the first respondent is directed to provide the applicant with a detailed breakdown of its reasonable expenses with supporting vouchers relating to the monies received by the first respondent from the applicant pursuant to the appointment in b) hereof and file same with this Court within sixty (60) days from the date of this order;

iii) the applicant shall, within thirty (30) days thereafter, verify the details provided by the first respondent under ii) hereof and file the verification with this Court;

iv) this Court will thereafter determine the amount to be paid by the first respondent to the applicant.

e) each party shall be responsible for its own costs, including costs occasioned by the joinder of the second respondent and postponement of the application on 21 November 2023.

 

___________________________

Khashane La M. Manamela

Acting Judge of the High Court

 

 

Dates of Hearing : 06 & 07 August 2024

Date of Judgment : 06 December 2024

 

 

 

Appearances:

 

Case NO: 64333/21

For Applicant : Mr K Tsatsawane SC (with Ms N Makhaye)

 

Instructed by : Diale Mogashoa Inc, Pretoria

 

For the First Respondent : Mr V Mabuza

Instructed by : Edward Nathan Sonnenbergs Inc, Johannesburg

 

For the Second Respondent : Ms K Lefaladi

Instructed by : HM Chaane Attorneys, Pretoria

 

 

Case NO: 64334/21

For Applicant : Mr K Tsatsawane SC (with Ms N Makhaye)

Instructed by : Diale Mogashoa Inc, Pretoria

 

For the First Respondent : Mr G Budlender SC (with W van Aswegen)

Instructed by : Phatshoane Henney Inc, Bloemfontein

c/o Tiaan Smuts Attorneys, Pretoria

 

For the Second Respondent : Ms K Lefaladi

Instructed by : HM Chaane Attorneys, Pretoria