South African ruling explores ‘delay’ in review applications

What is a review application in South Africa?

Where a party has been impacted by an administrative action, namely, a decision taken by a governmental or quasi-governmental entity in South Africa, it can approach a court to have the decision set aside by means of a review application. South African law provides two ways to bring a review application.

The first method is through the codified system set out in the Promotion of Administration of Justice Act 3 of 2000 (PAJA). The second, but older, method is through a legality review under the common law. Legality reviews have come back into favour and are increasingly used by state-owned entities that seek to review their own administrative decisions after becoming aware of irregularities in the procurement process and seek to set aside a decision made under previous management.

A notable difference between the two review processes is the timeframe allowed for bringing the review application.

The concept of ‘delay’ in review applications

Section 7 of PAJA provides that “proceedings for judicial review … must be instituted without unreasonable delay and not later than 180 days” after internal remedies have been exhausted, or, if there are no internal remedies, after the party becomes aware of the action which is sought to be set aside.

With a legality review, the application must be brought within a reasonable period of time, so as to not prejudice the respondent. However, what is considered to be a reasonable period of time is not specified in the common law.

The case before the Supreme Court of Appeal

In most instances, legality reviews are brought long after the award of a contract or tender. As such, there is an ongoing debate in the South African legal system about how the court should balance the consequences of an extreme delay in review proceedings being instituted against the underlying merits of the application. In particular, the question that the court is often faced with is whether it should dismiss a self-review purely on the question of delay, even where the merits potentially justify the granting of the application.

In this context, the recent decision in the case of Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others is relevant. In the case, the Supreme Court of Appeal (SCA) overruled a bold decision by the High Court to dismiss a review on delay grounds alone and considered when delay can be overlooked due to the merits of the case in the context of a legality review. The court considered two aspects: firstly, whether the review was brought within a reasonable time period, and secondly, whether the delay should be condoned given the circumstances.

Background

The Department of International Relations and Cooperation (DIRCO) awarded a tender to a joint venture between Simeka Group and Regiments Capital (the Joint Venture) and concluded a contract for the provision of the design, construction and financing of office and residential spaces in New York.

DIRCO and other state parties brought a self-review application of the contract on the basis that it alleged that there were numerous irregularities in the award, which they contended made the award of the contract unconstitutional and unlawful, and argued that the contract should therefore be set aside. The High Court ruled that the delay in bringing the application was too severe and dismissed the application without considering the merits of the self-review. DIRCO took the decision on appeal to the SCA, where the SCA found that despite there being a delay, the circumstances meant that delay could be condoned.

Was the award of the tender unlawful?

DIRCO brought a review application which sought to declare the tender unlawful, unconstitutional, or invalid. Upon considering the facts, the SCA found that the Joint Venture was not in a position to meet the requirements of the tender. This was due to, amongst other things, the Joint Venture being unable to demonstrate that it would be in a position to fund the project itself and it had failed to submit all the documents required under the procurement process. Accordingly, the SCA found that the process did not comply with South Africa’s Constitution or National Treasury Regulations. As such, the court declared the contract unconstitutional and unlawful.

The second issue that the SCA considered was the delay in the review application proceedings being instituted and whether the delay was reasonable.

Could the delay be condoned?

In the High Court, the judge found that there was a delay on the part of DIRCO and the other government parties in bringing their application. This delay was, it considered, “inordinate” and the explanation given for the delay was “woefully inadequate”. The High Court found the delay to be unreasonable. In coming to its decision, the High Court questioned DIRCO’s motive in bringing the application as it considered DIRCO brought the self-review to avoid a declaration by the National Treasury that it was responsible for “fruitless and wasteful expenditure”.

The SCA confirmed that the test for what constitutes an acceptable delay is flexible and depends on the “proven facts of each case and other objectively available considerations”. In this regard, when deciding whether the delay should be overlooked, courts consider the potential prejudice to interested parties; the consequences arising from setting aside the decision; and how the court’s ability to make a just and equitable order, under section 172(1)(b) of the South African Constitution, can be used to ameliorate any prejudice.

The courts will then account for the nature of the decision being reviewed and whether there is any illegality. In this case, it was noted that a court will overlook an unreasonable delay if there is a high likelihood of a contract being set aside.

In coming to its decision, the SCA referred to the decision in the case of Aurecon South Africa (Pty) Ltd v City of Cape Town where it was held that “whether it is in the interests of justice to condone a delay depends entirely on the facts and circumstances of the case”. In this regard, the SCA found that the High Court had overlooked the major financial burden and the revision of the tender requirements after the tender was awarded. Despite the reasons given for the delay not being adequate, the SCA held that this was outweighed by the negative impact of the contract on DIRCO, namely, the financial burden it would take on, after the deviations to the tender requirements and the amount of profit which Simeka Group would make, if it went forward.

Accordingly, the SCA held that “the cumulative effect of these factors and the high stakes, especially for the Department [DIRCO], impels the conclusion that the delay ought to be overlooked and the substantive merits of the review be considered”.

The outcome in this case can be contrasted with the decision in the case of Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd where the SCA rejected the application on the basis that the delay in bringing the application was unjustified, unreasonable and prejudiced the respondents; and that the Special Investigating Unit and the Department of Correctional Services did not show non-compliance with the requirements of the tender and further that the non-compliance was not severe enough to have the procurement process and subsequent contracts set aside.

What parties can learn from the decision

When bringing review applications before a court, applicants should do so within a reasonable time. If this is not possible, they should be mindful that while a delay in bringing a review application can be condoned, whether it is or not will depend largely on the circumstances of each case.

It remains an open question under South African law whether a court can dismiss a self-review purely on the question of delay, even where the merits potentially justify the granting of the application. However, this case demonstrates that if it is in the interests of justice or if there is a likelihood that the contract will be declared unlawful, there is a greater chance of a court condoning the delay.

Co-written by Chantel Carreira and Christoff Ferreira of Pinsent Masons.