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Must your bank protect your interests or its own?

One of the great reforms introduced by our Constitution has been the right to fair administrative action - in other words, the right to challenge decisions by government agencies.

Are you defenceless against the might of government agencies when they take decisions that impact adversely on you?

In the bad old (pre-constitutional) days, the citizenry was largely defenceless against decisions by government and governmental agencies if they took decisions or actions that adversely affected you.

The Constitution now protects your fundamental rights

One of the revolutionary aspects of our Constitution has been the creation of a constitutional right to "fair administrative action", that is to say, action by the government or government agencies which affects the right of a citizen.

Before the advent of the Constitution, the citizenry had very weak legal rights when it came to challenging bureaucratic actions by the government of the day which impacted adversely on them.

This was because our Roman-Dutch common law provided very narrow grounds on which such bureaucratic action could be challenged in the courts.

The advent of the Constitution effected a fundamental change to the rights of citizenry in this regard.

The constitutional right to fair administrative action

Firstly, the Constitution declares that it is now "the supreme law of the Republic: and that law or conduct inconsistent with it is invalid and that obligations imposed by the constitution must be fulfilled.

Secondly, the legality of administrative action by the state or state agencies can now be challenged in terms of the Promotion of Administrative Justice Act of 2000 which was enacted to give effect to the constitutional right to fair administrative action.

For example, it is notorious that a quick way to riches is to be awarded a government contract for the purchase of goods or the supply of services.

Prior to the Constitution, a person who tendered for a government contract, but was not successful and who suspected that there had been irregularities in the tender process, had scant prospects of being able to successfully challenge the award of the tender to another person.

These days, the Preferential Procurement Policy Framework Act of 2000 read with the Promotion of Administrative Justice Act of 2000 ensures a level playing field in the application for and award of government tenders.

As a first step, an unsuccessful tenderer can now compel the government agency to give reasons why a tender was awarded to one person rather than another.

The legal process to challenge the award of a government tender

It is far from plain sailing for a disappointed tenderer to get the award of a government contract set aside and reconsidered anew, but he is in a far stronger position that he would have been in prior to the enactment of the Constitution.

The process of challenging the award of a government tender in the post-constitutional era is well illustrated by the recent decision of the Free State High Court in Matlafalang Training CC v MEC: Free State, Department of Public Works [2008] ZAFSHC 136.

In this case, the Department of Public Works in the Free State had called for tenders to provide training to 137 persons in management and administration in the security industry.

The awarding of a provincial government tender constitutes "administrative action" and a person aggrieved by the award of a tender now has the right to be informed of the reasons why the tender was awarded to a particular person.

If those reasons reveal that the provisions of the Preferential Procurement Policy Framework Act were not complied with - in particular that all tender proposals were properly evaluated by a committee in accordance with a prescribed points system - then a court will set aside the award of the tender.

Usually, the unsuccessful tenderer will also apply for an interdict

Pending the outcome of the legal challenge to the awarding of the tender, the unsuccessful tenderer will usually want an interdict to stop the government contract from being carried out until the tender process has been reviewed and reconsidered by a court.

If there was no interdict, then by the time the dispute was finally determined by the court, the successful tenderer may have carried out his tender obligations and been paid, rendering the legal proceedings pointless.

However, an interdict is not available just for the asking. The applicant for an interdict must satisfy a series of legal tests - namely, that he has a clear legal right, that he will suffer irreparable harm if an interdict is not granted, that the balance of convenience favours the granting of an interdict, and that he has no other satisfactory legal remedy.

A problem that usually arises is that the facts in question - namely, whether the tender process was properly followed - are likely to be in dispute.

The right to be given reasons

The right of the unsuccessful tenderer to require that reasons be forthwith given as to why the tender was awarded to one party rather than to another may immediately bring to light that those reasons were flawed.

In such circumstances, the court may well award an interdict to prevent the tender from being carried out so as to give the unsuccessful tenderer time to bring a fully-fledged legal application to have the award of the tender set aside.

In this particular, case the reasons which the unsuccessful tender was given in response to a demand for reasons under the Promotion of Administrative Justice Act showed that his application for the tender had earned more points than the application of the party to whom the tender was awarded.

While this was not, of itself, conclusive proof that the applicant for the interdict should have been the successful tenderer (for the terms of the tender stated that it would not necessarily be awarded to the person who earned the highest points) it was enough to persuade the court in this case to grant an interdict to stop the tender from being performed, pending a further application to court to have the award of the tender set aside so that the tender applications could be evaluated anew with strict adherence to proper procedures.


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