THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No: 410/09

In the matter between:

CALIBRE CLINICAL CONSULTANTS (PTY) LTD
First Appellant
THE RIGHT TO CARE CONSORTIUM
Second Appellant

and

THE NATIONAL BARGAINING COUNCIL FOR THE
ROAD FREIGHT INDUSTRY
First Respondent

HIV MANAGED CARE SOLUTIONS (PTY) LTD
Second Respondent

Neutral citation:
Calibre Clinical Consultants (Pty) Ltd v National Bargaining
Council for the Road Freight Industry (410/09) [2010] ZASCA 94
(19 July 2010)

Coram:
NUGENT, LEWIS, PONNAN, CACHALIA and LEACH JJA

Heard:
7 MAY 2010

Delivered:
19 JULY 2010

Summary:
Bargaining Council established under Labour Relations Act 66
of 1995 – decisions relating to procurement of services –
whether subject to judicial review under the Promotion of
Administrative Justice Act 3 of 2000 – whether decisions in
conflict with that Act.

_______________________________________________________________________

ORDER
_______________________________________________________________________

On appeal from: South Gauteng High Court, Johannesburg (Willis J sitting
as court of first instance).

The appeal is dismissed. The appellants, jointly and severally, are to pay the
costs of the appeal, and the reserved costs of the application for interim
relief. The costs in each case are to include the costs of two counsel so far as
two counsel were employed.

_______________________________________________________________________

JUDGMENT
_______________________________________________________________________

NUGENT JA (LEWIS, PONNAN, CACHALIA and LEACH JJA
concurring).

[1] The first respondent – the Bargaining Council for the Road Freight
Industry – is a bargaining council established under the enabling provisions
of s 27 of the Labour Relations Act 66 of 1995 (LRA). Wishing to appoint a
service provider to manage one of its projects the council invited interested
parties to submit proposals for its consideration. Proposals were submitted
by, amongst others, a partnership1 comprising Thebe Ya Bophela Healthcare
Administrators (Pty) Ltd (Thebe) and Calibre Clinical Consultants (Pty) Ltd

1 It seems that a formal partnership agreement was never produced.

(the latter is the first appellant2) to which I shall refer as the partnership, and
by a consortium (the second appellant) comprising Right to Care Limited
and the remaining appellants, to which I shall refer as the consortium.

[2] After considering the various proposals the council decided not to
appoint any of those who had submitted proposals. Instead it asked the
auditing firm KPMG to assist it to identify an appropriate service provider.
Two candidates were identified, one of which was the second respondent,
HIV Managed Care Solutions (Pty) Ltd (it trades under the name Careworks
and I will refer to it as such) which the council appointed.

[3] Aggrieved by the decisions of the council the appellants3 applied to
the High Court at Johannesburg to review and set them aside,4 relying upon
the provisions of the Promotion of Administrative Justice Act 3 of 2000
(PAJA). Their application was dismissed by Willis J. This appeal against his
order is before us with the leave of this court.

[4] It is convenient at the outset to outline the nature of a bargaining
council. Section 27(1) of the Labour Relations Act 66 of 1995 (LRA) allows
for one or more registered trade unions and one or more registered
employers' organisations to establish a bargaining council for a particular
industry and area. The parties do so by adopting a constitution and having
the bargaining council registered. A bargaining council exists primarily as a
forum for collective bargaining between the parties. Generally the parties

2 Thebe was the first applicant in the court below but according to the notice of appeal it is not a party to
this appeal.
3 Together with Thebe.
4 Interim relief was also sought but that was refused by Jajbhay J, who reserved the costs in relation to that
application.

will conclude collective agreements from time to time, which become
binding on them and on their members. In certain circumstances the Minister
may extend the terms of a collective agreement to third parties in the
industry by a declaration to that effect published in the Government Gazette.
A bargaining council has various statutory powers to enforce the terms of its
collective agreements.

[5] In addition to serving as a forum for collective bargaining a
bargaining council might also undertake other functions directed at
maintaining industrial harmony and promoting the welfare of employees in
the industry. In particular a bargaining council is empowered by the LRA –
powers that are replicated in the constitution of the council in this case – to
‘promote and establish training and education schemes’5 and to ‘establish
and administer pension, provident, medical aid, sick pay, holiday,
unemployment and training schemes or funds or any similar schemes or
funds for the benefit of one or more of the parties to the bargaining council
or their members.’6

[6] The material facts in this case are lucidly set out in the judgment of
the court below but some repetition is necessary to explain in more detail
how this matter arose. The council’s concern for the impact of the
HIV/AIDS pandemic on employees in the road freight industry led it to
establish an awareness programme that it called ‘Trucking Against AIDS’.
In about 2007 the parties to the council agreed to extend that programme by
establishing what it called a ‘wellness fund’ that would, amongst other

5 Section 28(1)(f) and clause 4.6 of the council’s constitution.
6 Section 28(1)(g) and clause 4.8 of the council’s constitution.

things, introduce and maintain a programme to provide anti-retroviral
treatment to employees in the industry. Their agreement to establish the
fund, and the terms upon which it was to function, were recorded in a clause
that was inserted into the existing collective agreement. The collective
agreement had been extended to the industry generally by declaration of the
Minister in the Gazette and the amendment was similarly extended.

[7] The fund was to be financed from compulsory contributions levied
upon employers and employees. It was agreed that the fund would be under
the control of what was referred to in the evidence as a ‘wellness committee’
(called an ‘AIDS committee’ in the agreement) and it was agreed that the
committee ‘may contract with service providers for the provision of services,
facilities, publications, support, training, counseling, presentations and all
other forms of services necessary for the implementation and continuance of
the plan …’.

[8] The council needed an appropriate service provider to manage and
administer the programme. In about July 2007 it invited selected parties to
submit proposals for the provision of such a service. The service that was
required encompassed the co-ordination of an anti-retroviral management
programme, the provision of education and training, the provision of a
counseling service, the procurement of pharmaceuticals, and the
establishment of a drug distribution service. A poor response to its
invitations prompted the council later to advertise the invitation more
generally.

[9] Written proposals were submitted by, amongst others, the partnership
and the consortium. In September 2007 the various proposers were invited to
present their proposals to an interview panel. On 5 October 2007 the council
wrote to the consortium, congratulating it on its presentation, and advising
that the panel had decided in principle that the consortium should be
appointed, but that a due diligence review was still required. It was told that
once that had been completed the panel would ‘put together a
recommendation to the Council for final adjudication’.

[10] The council instructed a firm of auditors, SizweNtsaluba VSP, to
perform what was described as a ‘limited financial due diligence review’ of
the various bidders ‘for the sole purpose of assisting the [council] in
assessing the appropriateness of the bidders as the designated Wellness
Program Service Provider’. SizweNtsaluba duly performed the review and
submitted a substantial report dated 6 December 2007.

[11] In its report SizweNtsaluba raised certain concerns that it said ‘might
require further discussion and consideration’ before the council selected the
bidder concerned. So far as the partnership was concerned it was reported,
amongst other things, that Thebe was insolvent (its liabilities exceeded its
assets by R130 556). So far as the consortium was concerned two concerns
were expressed:
‘The [Right to Care] consortium is heavily reliant on a single individual who will be in
charge of co-ordinating the project with no clear indication of succession planning
regarding the replacement of this person should it prove necessary’
(The person concerned was Dr Grietjie Strydom, who was the sole employee
of one of the members of the consortium.)

‘[Right to Care] is heavily reliant on income from a single source, namely USAID. The
income is reliant on dependencies that are not under the control of [Right to Care].’

[12] After considering the report the council requested SizweNtsaluba to
‘engage with the bidders and report back’ on the steps taken by the various
bidders to address the concerns that had been expressed. SizweNtsaluba
raised its concerns with the partnership and with the consortium. The
partnership responded in a further presentation that it made to
SizweNtsaluba and also submitted further documents, while the consortium
responded in writing.

[13] On 18 February 2008 SizweNtsaluba submitted a further report to the
council in which it provided a summary of the responses it had received. As
far as the insolvency of Thebe was concerned it reported Thebe’s response
as follows:
‘There is a [memorandum of understanding] in place between [Thebe Investment
Corporation]7 and [Thebe] whereby [Thebe Investment Corporation] has subordinated its
claims against [Thebe] for the benefit of other creditors. In the letter from [Thebe
Investment Corporation] to [the council] (dated 6 September 2007) it was stated that
[Thebe Investment Corporation] regards the provision of affordable healthcare as a core
component of their financial services strategy and are fully committed to establishing
[Thebe] as a major player in the healthcare industry. As a result, [Thebe Investment
Corporation] will continue to provide full financial backing to [Thebe] to enable [Thebe]
to meet its objectives.’
As for the two concerns raised in relation to the consortium the response was
reported as follows:

7 Thebe Investment Corporation was apparently the holding company of Thebe.

‘RTC has stated that as the primary partner in the contract with [the council], RTC will
take full responsibility for the implementation of the project. Dr Grietjie Strydom will
increase her capacity in the organization to meet the needs of [the council].’
‘RTC has stated that it is expanding its interventions and programmes into the private
sector and is broadening the funding base across the organisation, thereby further
diversifying the funding of its revenue.’

[14] On 27 February 2008 the Wellness Committee met to consider the
reports. Meanwhile a further concern had arisen. On the previous day the
council received a letter from Alexander Forbes Financial Services (Pty)
Ltd. The council was informed that Dr Grietjie Strydom had formerly been
employed by Alexander Forbes, and was subject to a restraint agreement that
precluded her from providing AIDS intervention programmes and from
dealing with clients or potential clients of Alexander Forbes, until November
2009. The council sent a copy of the letter to the consortium. Dr Strydom’s
response was that she had been advised by her attorneys that the restraint
was not enforceable. The council also sought the advice of its attorneys, who
advised that the risk of the restraint being enforced was slender but that the
council would need to weigh that against the material harm that would result
if it was indeed enforced.

[15] The committee remained uncomfortable with appointing both the
partnership and the consortium and it sought a second opinion from KPMG.
KPMG reviewed the information that had been before SizweNtsaluba. It
expressed the opinion that ‘the issues highlighted by Ntsaluba relating to the
appointment of the consortium had been addressed’ and recommended that it
be awarded the contract.

[16] The wellness committee considered the matter at meetings held on 23
and 26 May 2008. It felt itself unable to agree with the opinion that had been
expressed by KPMG. It considered that neither the partnership nor the
consortium had adequately addressed the concerns that had been raised by
SizweNtsaluba and decided to recommend to the council that neither should
be appointed. Instead KPMG should be asked to identify alternative service
providers. The council adopted the committee’s recommendations on 28
May 2008.

[17] KPMG duly identified Careworks and another organisation as
potential service providers. A due diligence review revealed no difficulties
with either and KPMG recommended that Careworks be appointed. The
committee, and ultimately the council, resolved to appoint Careworks and a
formal contract was concluded on 1 December 2008.8

[18] In their notice of motion the appellants sought orders setting aside the
council’s decision not to appoint any of the initial bidders, its decision to
exclude the appellants when identifying alternative providers, and its
decision to appoint Careworks.

[19] The decisions of the council are susceptible to review at the instance
of the appellants only if they constitute ‘administrative action’ as
contemplated by PAJA, which is defined as much by the nature of the
decision concerned (or the failure to make a decision) as by its source. In

8 We were told from the bar that the council’s contract with Careworks terminates in December of this year
but it is open to renewal.

that respect it constitutes ‘administrative action’ only if, amongst other
things, it was made by
‘(a)
an organ of state when –
(i)
exercising a power in terms of the Constitution or a provincial
constitution; or
(ii)
exercising a public power or performing a public function in terms of any
legislation; or
(b)
a natural or juristic person, other than an organ of state, when exercising a public
power or performing a public function in terms of an empowering provision ….’

[20] PAJA provides that an ‘organ of state’ bears the ‘meaning assigned to
it in section 239 of the Constitution’ – and that section defines the term to
mean
‘(a)
any department of state or administration in the national, provincial or local
sphere of government; or
(b)
any other functionary or institution –
(i)
exercising a power or performing a function in terms of the Constitution or
a provincial constitution; or
(ii)
exercising a public power or performing a public function in terms of any
legislation
….’

[21] It will be readily apparent that once that definition is inserted in
PAJA’s definition of ‘administration action’ much of the latter definition is
tautologous. Had the term been defined in PAJA to mean ‘a decision taken
(or any failure to take a decision) by an institution or functionary exercising
a public power or performing a public function’9 it would have covered

9 When applying the definition of ‘administrative action’ the distinction between ‘legislation’ (in subsection
(a)(ii)) and an ‘empowering provision’ (in subsection (b)) will prove to be more apparent than real.

much the same ground. Once the definition is stripped of its superfluity the
enquiry in the present case really comes down to whether the council, in
making the decisions that are sought to be impugned, was ‘exercising a
public power or performing a public function’.

[22] The scope of judicial review in the context of the present case10 has
been the subject of enquiry in numerous cases in other jurisdictions. In AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council11 Yacoob J
observed that in the United States institutions are subject to constitutional
review
‘if in the final analysis, they can be said to be “an agency or instrumentality of the United
States”’.12
He observed that in Canada
‘[i]t is well established that the Charter applies to all the activities of a government entity
whether those activities are described as private, and that the Charter may also apply to
non-governmental entities when engaged in activities that are governmental in nature ….
When it is alleged that the action of a private entity violates the Charter it must be
established that the entity, in performing the function, is part of government within the
meaning of s 32(1).’13

[23] It would be superfluous to retrace the authorities in those countries
that led the learned judge to those conclusions. But very much the same
approach has been taken by the courts in England and it is instructive to
explore in some detail the leading cases in that regard.

10 We are concerned in this case with public law review and not the form of private law review that has
been invoked in cases such as Turner v Jockey Club of South Africa 1974 (3) SA 633 (A) and Theron v
Ring van Wellington van die N.G. Sendingkerk in Suid Afrika 1976 (2) SA 1 (A).
11 2007 (1) SA 343 (CC).
12 Para 33.
13 Paras 35 and 36.

[24] In determining the scope of judicial review at common law the courts
in that country have always looked to whether the conduct in question has
features that might be said to be ‘governmental’ in nature. While at one time
the source of the power that was exercised by the body concerned was
considered to be determinative the authors of De Smith’s Judicial Review14
observe that in more recent times courts have considered that to be too
restrictive. They go on to say:
‘Since 1987 [the courts] have developed an additional approach to determine
susceptibility [to judicial review] based on the type of function performed by the
decision-maker. The “public function” approach is, since 2000, reflected in the Civil
Procedure Rules: CPR. 54.1(2)(a)(ii), defines a claim for judicial review as a claim to the
lawfulness of “a decision, action or failure to act in relation to the exercise of a public
function”’.

[25] On that extended approach the courts, once more, have consistently
taken account of the extent to which the conduct in question might or might
not have features that are ‘governmental’ in nature when determining
whether it is reviewable. In the seminal decision that marked the start of that
more expansive approach – Regina v Panel on Take-Overs and Mergers, Ex
parte Datafin Plc15 – the Master of the Rolls said the following of the Panel
on Take-overs and Mergers (an unincorporated association without legal
personality, having about twelve members appointed by and representing
various financial bodies):
‘No one could have been in the least surprised if the panel had been instituted and
operated under the direct authority of statute law, since it operates wholly in the public
domain. Its jurisdiction extends throughout the United Kingdom. Its code and rulings

14 De Smith’s Judicial Review 6 ed by The Rt Hon The Lord Woolf, Jeffrey Jowell QC and Andrew Le
Seur, assisted by Catherine M. Donnelly at paras 3-041 to 3-042..
15 [1987] 1 QB 815 (CA) at 835G-836B.

apply equally to all who wish to make take-over bids or promote mergers, whether or not
they are members of bodies represented on the panel. Its lack of a direct statutory base is
a complete anomaly, judged by the experience of other comparable markets world wide.
The explanation is that it is a historical “happenstance”, to borrow a happy term from
across the Atlantic. Prior to the years leading up to the “Big Bang”, the City of London
prided itself upon being a village community, albeit of a unique kind, which could
regulate itself by pressure of professional opinion. As government increasingly accepted
the necessity for intervention to prevent fraud, it built on City institutions and mores,
supplementing and reinforcing them as appeared necessary. It is a process which is likely
to continue, that the position has already been reached in which central government has
incorporated the panel into its own regulatory network built up under the Prevention of
Fraud (Investments) Act 1958 and allied statutes, such as the Banking Act 1979.’

[26] Later, in Regina v Disciplinary Committee of the Jockey Club, Ex
parte Aga Khan,16 which held that conduct of the Jockey Club was not
susceptible to public law review, the Master of the Rolls said:
‘[The Jockey Club] has not been woven into any system of governmental control of
horseracing, perhaps because it has itself controlled horseracing so successfully that there
has been no need for any such governmental system and such does not therefore exist.
This has the result that while the Jockey Club’s powers may be described as, in many
ways, public they are in no sense governmental.’
In the same case Lord Justice Hoffman said:17
‘What one has here [referring to Regina v Panel on Takeovers and Mergers, ex parte
Datafin Plc18] is a privatisation of the business of government itself. The same has been
held to be true of the Advertising Standards Authority … and the Investment
Management Regulatory Organisation Ltd.… Both are private bodies established by the
industry but integrated into a system of statutory regulation. There is in my judgment
nothing comparable in the position of the Jockey Club.’

16 1993 (1) WLR 909 (CA) at 923H.
17 At 931H-932A.
18 See below.

[27] A similar approach is reflected in the decision of Simon Brown J in
Regina v Chief Rabbi of the United Hebrew Congregations of Great Britain
and the Commonwealth, Ex parte Wachmann:19
‘To say of decisions of a given body that they are public law decisions with public law
consequences means something more than that they are decisions which may be of great
interest or concern to the public or, indeed, which may have consequences for the public.
To attract the court’s supervisory jurisdiction there must be not merely a public but
potentially a governmental interest in the decision-making power in question.… In other
words, where non-governmental bodies have hitherto been held reviewable, they have
generally been operating as an integral part of a regulatory system which, although itself
non-statutory, is nevertheless supported by statutory powers and penalties clearly
indicative of government concern.’

[28] De Smith’s Judicial Review notes that in applying a ‘public functions’
test the courts have held decisions taken by the following, amongst others, to
be susceptible to judicial review: the Advertising Standards Authority; the
Press Complaints Commission; the Code of Practice Committee of the
Association of the British Pharmaceutical Industry; the Life Assurance Unit
Trust Regulatory Organisation; London Metal Exchange Ltd; the managers
of a privately owned psychiatric hospital; and Hampshire Farmers Markets
Ltd. On the other hand the courts have not been receptive to exercising those
powers over sports governing bodies,20 religious bodies,21 and various
commercial organisations,22 notwithstanding the influence they assert in
substantial sectors of the community.

19 [1992] 1 WLR 1036 (QB) at 1041C-E.
20 R v Football Association Ltd ex parte Football League Ltd [1993] 2 All ER 833.
21 Chief Rabbi of the United Hebrew Congregations, above, R v Imam of Bury Park Mosque, Luton ex parte
Ali (Sulaiman) [1994] COD 142.
22 R v Insurance Ombudsman ex parte Aegon Life Assurance Ltd [1994] COD 426, R v Association of
British Travel Agents ex parte Sunspell Ltd (t/a Superlative Travel) [2001] ACD 16, R v Lloyd’s of London
ex parte Briggs [1993] 1 Lloyd’s Rep. 176.

[29] More recently the courts in that country have been statutorily
empowered to test conduct for compatibility with the European Convention
on Human Rights by s 6 of the Human Rights Act 1998, which provides:
‘(1) It is unlawful for a public authority to act in a way which is incompatible with a
Convention right.
…
(3)
In this section “public authority” includes … (b) any person certain of whose
functions are functions of a public nature …
…
(5) In relation to a particular act, a person is not a public authority by virtue only of
subsection 3(b) if the nature of the act is private.’

[30] In determining whether a function is ‘of a public nature’ for purposes
of that legislation the courts, again, have searched for the presence or
absence of features of the conduct in question that are ‘governmental’ in
nature. In Aston Cantlow and Wilmcote with Billesley Parochial Church
Council v Wallbank23 Lord Nicholls of Birkenhead approached the question
as follows:
‘What, then, is the touchstone to be used in deciding whether a function is public for this
purpose? Clearly there is no single test of universal application. There cannot be, given
the diverse nature of governmental functions and the variety of means by which these
functions are discharged today. Factors to be taken into account include the extent to
which in carrying out the relevant function the body is publicly funded, or is exercising
statutory powers, or is taking the place of central government or local authorities, or is
providing a public service.’24

23 [2004] 1 AC 546.
24 Para 12.

[31] In YL (by her litigation friend the Official Solicitor) v Birmingham
City Council,25 the House of Lords was divided on the question whether a
private care home exercised ‘functions of a public nature’ in relation to
residents who had been placed by the local authority in fulfilling its statutory
obligation to provide such care.26 Notwithstanding the division the enquiry
in each case was conducted with reference to the extent to which the home
could be said to be performing governmental functions. Thus Lord Bingham
(in the minority) said the following:27
‘As Lord Nicholls also observed [in Aston Cantlow] (at [12]), there is no single test of
universal application to determine whether a function is of a public nature. A number of
factors may be relevant, but none is likely to be determinative on its own and the weight
of different factors will vary from case to case. Tempting as it is to try and formulate a
general test applicable to all cases which may arise, I think there are serious dangers in
doing so.’
He went on to list as relevant factors
‘the role and responsibility of the state in relation to the subject matter in question, ... the
nature and extent of any statutory power or duty in relation to the function in question, …
the extent to which the state, directly or indirectly, regulates, supervises and inspects the
performance of the function in question, and imposes criminal penalties on those who fall
below publicly promulgated standards in performing it, … whether the function in
question is one for which, whether directly or indirectly, and whether as a matter of
course or as a last resort, the state is by one means or another willing to pay, … the extent
of the risk, if any, that improper performance of the function might violate an individual's
convention right.’28
Baroness Hale of Richmond (also in the minority) said the following:29

25 [2007] 3 All ER 957 (HL).
26 Lord Scott, Lord Mance and Lord Neuberger in the majority, and Lord Bingham and Baroness Hale in
the minority.
27 Para 5.
28 Paras 7 to 11.
29 Paras 65 – 69.

‘While there cannot be a single litmus test of what is a function of a public nature, the
underlying rationale must be that it is a task for which the public, in the shape of the state,
have assumed responsibility, at public expense if need be, and in the public interest….
One important factor is whether the state has assumed responsibility for seeing that this
task is performed.… Another important factor is the public interest in having that task
undertaken… Another important factor is public funding … Another factor is whether the
function involves or may involve the use of statutory coercive powers.’
Reciting with approval extracts from the various speeches in Aston Cantlow,
Lord Neuberger said:
‘Even more to the point, Lord Hope also said (at [49]) that “public functions” in this
context is thus clearly linked to the functions and powers, whether centralised or
distributed, of government.…. Lord Rodger referred (at [159], [160] and [163]) to entities
“exercising governmental power”, “carrying out the functions of government” and having
the “public function of government”. This is very much in line with the broader approach
of Lord Nicholls: while stressing that it was “no more than a useful guide”, he said (at
[10]) that in the light of “the repetition of the description ‘public’” in s 6(3)(b),
“essentially the contrast being drawn is between functions of a governmental nature and
functions, or acts, which are not of that nature”. To similar effect, Lord Hobhouse of
Woodborough (at [88]) invoked the test of a function which is “governmental in nature”
and of entities which are “inherently governmental” (At para [159]).’

[32] In AAA Investments30 Yacoob J, having noted the position in the
United States and Canada, said the following:
‘Our Constitution ensures, as in Canada and the United States, that government cannot be
released from its human rights and rule of law obligations simply because it employs the
strategy of delegating its functions to another entity. Our Constitution does not do this,
however, by an expanded notion of the concept of Government or the Executive or by
relying on concepts of agency or instrumentality. It does so by a relatively broad
definition of an organ of State.  This definition renders the legality principle and the Bill

30 Paras 40 and 41.

of Rights applicable to a wider category of function than the Charter does in Canada. …
In our constitutional structure, the Council or any other entity does not have to be part of
government or the government itself to be bound by the Constitution as a whole.’

[33] To the extent that the learned judge might be taken to have suggested
in that passage that the power of review in this country might extend beyond
functions that, broadly speaking, might be said to be governmental in nature,
the learned judge did not expand upon what those functions might be. But
consistent with the approach that is followed in other jurisdictions the basis
for the decision in that case was nonetheless that the Micro Finance
Regulatory Council indeed performed a ‘governmental’ function, so far as it
was the instrument through which the Minister exercised regulatory control
over the industry.31

[34] Governmental control over the licensing of the Johannesburg Stock
Exchange was determinative of its susceptibility to review in Dawnlaan
Beleggings (Edms) Bpk v Johannesburg Stock Exchange,32 decided before
the present constitutional dispensation, in which Goldstone J said the
following:
‘In my judgment, the enquiry posed in the present case is whether the terms of the Act
impose a public duty upon the JSE to adhere to its own rules and requirements. In my
view such a duty is clearly imposed by the Act. In the first place a stock exchange may
only be licensed in the public interest: ... In the second place, the rules of a stock
exchange are required to be published in the Government Gazette. Thus the whole public
is required to be given notice of such rules. .... Thirdly, interested parties, apart from
members of the stock exchange, may object to amendments of, or additions to, those

31 Paras 44 and 45.
32 1983 (3) SA 344 (W) at 364B-D and 365A. See Etienne Mureinik ‘Discretion and Commitment: The
Stock Exchange Case’ [1985] SALJ 434.

rules after publication thereof in the Government Gazette. ... Then the rules are designed
to ensure that the stock exchange is carried on with due regard to the public interest: ...
To regard the JSE as a private institution would be to ignore commercial reality and
would be to ignore the provisions and intention of the Act itself. It would also be to
ignore the very public interest which the Legislature has sought to protect and safeguard
in the Act.’

[35] Some recent decisions of the high courts in this country reflect a more
expansive approach but they are not always consistent. The question whether
the conduct of a political party is susceptible to review33 evoked varying
responses in Marais v Democratic Alliance,34 Van Zyl v New National
Party,35 and Max v Independent Democrats.36 In Cronje v United Cricket
Board of South Africa37 it was held, consistently with decisions in England,38
that the United Cricket Board did not perform a public function. Kirk-Cohen
J expressed his reasons for that conclusion as follows:
‘The respondent is not a public body. It is a voluntary association wholly unconnected to
the State. It has its origin in contract and not in statute. It powers are contractual and not
statutory. It functions are private and not public. It is privately and not publicly funded.
The applicant, indeed, makes the point that it “has no statutory recognition or any
“official” responsibility for the game of cricket in South Africa.”’39

[36] On the other hand, in Tirfu Raiders Rugby Club v SA Rugby Union,40
Yekiso J held that the SA Rugby Union exercised public powers and

33 See Lisa Thornton: The Constitutional Right to Just Administrative Action – Are Political Parties
Bound? (1999) 15 SAJHR 351.
34 [2002] 2 All SA 424 (C).
35 [2003] 3 All SA 737 (C).
36 2006 (3) SA 112 (C).
37 2001 (4) SA 1361 (T)
38 See, for example, R v Football Association Ltd ex parte Football League Ltd [1993] 2 All ER 833.
39 At 1375D-E.
40 [2006] 2 All SA 549 (C).

performed a public function, principally, it seems, because the matters in
which it engages are matters of public interest.41 I have considerable doubt
whether a body can be said to exercise ‘public powers’ or perform a ‘public
function’ only because the public has an interest in the manner in which its
powers are exercised or its functions are performed, and I find no support for
that approach in other cases in this country or abroad.

[37] In Mittalsteel South Africa (Ltd) (formerly Iscor Ltd) v Hlatswayo42
this court enquired into the meaning of a ‘public body’ under the Promotion
of Access to Information Act 2 of 2000 (which is defined in much the same
terms as the definition with which we are concerned) and relied heavily
upon the extent to which the body exhibited governmental features.

[38] Thus in cases concerning the scope of public law judicial review in
other countries – and most often in this country as well – courts have
consistently looked to the presence or absence of features of the conduct
concerned that is governmental in nature. What has been considered to be
relevant is the extent to which the functions concerned are ‘woven into a
system of governmental control’, or ‘integrated into a system of statutory
regulation’, or the government ‘regulates, supervises and inspects the
performance of the function’, or it is ‘a task for which the public, in the
shape of the state, have assumed responsibility’, or it is ‘linked to the
functions and powers of government’, or it constitutes ‘a privatisation of the
business of government itself’, or it is publicly funded, or there is
‘potentially a governmental interest in the decision-making power in

41 Paras 28 and 29.
42 2007 (1) SA 66 (SCA).

question’, or the body concerned is ‘taking the place of central government
or local authorities’, and so on.

[39] While curial pronouncements from other jurisdictions are not
necessarily transferrable to this country they can nonetheless be instructive. I
do not find it surprising that courts both abroad and in this country –
including the Constitutional Court in AAA Investments – have almost always
sought out features that are governmental in kind when interrogating
whether conduct is subject to public law review. Powers or functions that are
‘public’ in nature, in the ordinary meaning of the word, contemplates that
they pertain ‘to the people as a whole’ or that they are exercised or
performed ‘on behalf of the community as a whole’43 (or at least a group or
class of the public as a whole44), which is pre-eminently the terrain of
government.

[40] It has been said before that there can be no single test of universal
application to determine whether a power or function is of a public nature
and I agree. But the extent to which the power or function might or might
not be described as ‘governmental’ in nature, even if it is not definitive,
seems to me nonetheless to be a useful enquiry. It directs the enquiry to
whether the exercise of the power or the performance of the function might
properly be said to entail public accountability and it seems to me that
accountability to the public is what judicial review has always been about.  It
is about accountability to those with whom the functionary or body has no
special relationship other than that they are adversely affected by its conduct

43 Shorter Oxford Dictionary.
44 See the definition of ‘public’ in s 1 of PAJA.

and the question in each case will be whether it can properly be said to be
accountable notwithstanding the absence of any such special relationship.

[41] A bargaining council, like a trade union and an employers’
association, is a voluntary association that is created by agreement, to
perform functions in the interests and for the benefit of its members. I have
considerable difficulty seeing how a bargaining council can be said to be
publicly accountable for the procurement of services for a project that is
implemented for the benefit of its members – whether it be a medical aid
scheme, or a training scheme, or a pension fund, or, in this case, its wellness
programme.

[42] I do not find in the implementation of such a project any of the
features that have been identified in the cases as signifying that it is subject
to judicial review. When implementing such a project a bargaining council is
not performing a function that is ‘woven into a system of governmental
control’ or ‘integrated into a system of statutory regulation’. Government
does not ‘regulate, supervise and inspect the performance of the function’,
the task is not one for which ‘the public has assumed responsibility’, it is not
‘linked to the functions and powers of government’, it is not ‘a privatisation
of the business of government itself’, there is not ‘potentially a
governmental interest in the decision-making power in question’, the council
is not ‘taking the place of central government or local authorities’, and most
important, it involves no public money. It is true that a government might
itself undertake a similar project on behalf of the public at large – just as it
might provide medical services generally and pensions and training schemes
to the public at large – but the council is not substituting for government

when it provides such services to employees with whom it is in a special
relationship.

[43] Much was sought to be made by counsel for the appellants of the fact
that the council’s collective agreement – which records the terms upon
which the wellness fund was established and is to be administered – has
been extended to the industry in general by declaration in the Government
Gazette. The argument, as I understand it, was that the collective agreement
– which has been called in a comparable context, a ‘piece of subordinate,
domestic legislation’45 – constitutes a ‘public power’ that it exercises when it
establishes and administers such a fund, but in my view counsel’s reliance
on the collective agreement is misplaced. The collective agreement is not the
source of the council’s powers. The powers of the council emanate from its
constitution, or the equivalent powers conferred upon it by s 28 of the
statute. The collective agreement is no more than the terms upon which the
parties have agreed that the council will exercise those powers.

[44] That the procurement of goods and services by the council – for
whatever purpose – is not a public function seems to me to find support in
the Constitution itself. Government and its agencies are expected to be
publicly accountable for the contracts that they conclude because they are
spending public money and there are two principal reasons why that should
be so. In the first place the public is entitled to be assured that its moneys are
properly spent. And secondly, the commercial public is entitled to equal
opportunity to benefit from the bounty of the state to which they are

45 S v Prefabricated Housing Corporation (Pty) Ltd 1974 (1) SA 535 (A) at 540A-B, in relation to
industrial agreements provided for under the Industrial Conciliation Act 28 of 1956.

themselves contributories.46 The accountability of government for
procurement is expressly provided for in s 217 of the Constitution, which
requires that government bodies must contract ‘in accordance with a system
which is fair, equitable, transparent, competitive and cost effective’, but that
prescript does not apply to a bargaining council. It is not an ‘organ of state’
within the narrower definition of that term in s 217, nor is it an ‘institution
identified in national legislation’ to which that procurement policy applies. I
also see no principial reason why it should be publicly accountable for the
contracts that it concludes. It is not expending public money, but money that
emanates from its members and, in some cases, others in the industry, and it
is to them, not the public, that it is accountable for the manner in which it
does so. More important, for present purposes, I can see no basis upon which
the commercial public, who are not contributors to its funds, not even
indirectly, might justifiably be entitled to hold the council to account for the
manner in which they are spent.

[45] Indeed, a singular feature of this case is that counsel for the appellants
conceded, correctly, that the council would have been perfectly entitled to
seek out and appoint a service provider without first inviting tenders or
proposals at all. If it is not publicly accountable for choosing with whom to
contract then I see no reason why it is publicly accountable for choosing
with whom not to contract.

[46] While it is true that the council ultimately owes its existence and its
powers to its enabling statute that applies as much to every company, which
ultimately owes its existence and its powers to company legislation, and is

46 Cf Sue Arrowsmith: The Law of Public and Utilities Procurement (London 2005) paras 1.2 – 1.6.

by no means determinative of whether it is publicly accountable for its
conduct through the remedy of judicial review. Whatever the case might be
in relation to its other functions in my view the council, when managing its
wellness fund and procuring services for that purpose, was performing a
quintessentially domestic function in the exercise of its domestic powers,
and its decisions that are now in issue are not subject to review at the
instance of the appellants.47 On that ground alone the application should
have failed. But even had the decisions of the council been reviewable,
which the court below assumed them to be, I do not think the council can be
said to have acted unlawfully.

[47] Three decisions of the council were sought to be impugned – its
decision not to appoint either of the appellants, its decision to exclude them
when it sought alternatives, and its decision to appoint Careworks – but in
my view only the first decision is really material. If the council was entitled
to reject the proposals that had been submitted by the appellants then it
seems to me that it was not obliged to invite them to make proposals once
more (particularly as it is conceded that it is under no obligation to invite
proposals before it contracts). As to the claim to set aside the decision to
appoint Careworks, that claim was not independently founded, but was
founded on the alleged invalidity of the earlier decisions.

[48]  There were really two grounds upon which the appellants contend
that the decision to reject their proposals was unlawful. In the first place it

47 No doubt it might be held to account for the exercise of its powers by members and others who have
been subjected to its collective agreement, according to the principles enunciated in cases like Turner v
Jockey Club of South Africa and Theron v Ring van Wellington van die NG Sendingkerk in Suid Afrika,
above, but that is not what we are concerned with in this case.

was submitted that the council’s decision was procedurally unfair in that it
was obliged to have allowed the appellants an opportunity to be heard before
it took the decision. Secondly, it was submitted that the decision was
irrational and unreasonable.

[49] As to the first complaint the court below said that while the council
might ideally have invited representations from the appellants, nonetheless:
‘[it] must be borne in mind that the persons making the decisions on behalf of [the
council] are not trained lawyers, they were acting in stressful circumstances: the record
shows that they attempted to act with appropriate fairness and they did invite the
[appellants] to make representations on the issues of the [first appellant’s] solvency and
the restraint of trade agreement applicable to Dr Grietjie Strydom – the two issues that
led to the decisions of which the [appellants] now complain. Against the background of
all the relevant circumstances of this case, it cannot, in my view, be concluded that the
court should interfere with the decision of the [council] to award the tender to
[Careworks]. The court is averse to taking an armchair view of the matter.’

[50] Even if the council acted unlawfully, the court below went on to say,
‘the court retains a judicial discretion as to whether or not to quash that
decision’ and that ‘[t]aking everything into account it would not be
appropriate to intervene in the tender process in this matter.’ Much of the
argument advanced in the appellants’ heads of argument was directed to
whether the court indeed had a discretion to refuse relief but on the view that
I take of the matter it is not necessary to revisit that question.48

48 Cf Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 (6) SA 222 (SCA) para 36; Millenium Waste
Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province 2008 (2) SA 481 (SCA) para 23.

[51] The submissions on behalf of the appellants treated it as self-evident
that they were entitled to be afforded a hearing before the council rejected
their proposals but that is by no means self-evident to me. In heads of
argument presented on their behalf it was asserted that upon responding to
the invitation to submit proposals a contract came into being with the
council, and that the council ‘was not at liberty to depart from the process
that had been brought about without at the very least advising the appellants
of this fact’. In support of those assertions reliance was placed upon Logbro
Properties CC v Bedderson NO49 and Nextcom (Pty) Ltd v Funde NO.50 In
Logbro Properties Cameron JA pointedly expressed no opinion on whether
the invitation to tender in that case created contractual obligations.51 In
Nextcom Bertelsmann J said no more than that the awarding of a contract
constituted administrative action. No doubt there will be cases in which the
terms in which tenders are invited will give rise to contractual obligations
upon their acceptance but whether that is so in a particular case will depend
upon its facts, as with all cases of contract. In this case there is no factual
basis upon which to conclude that the parties came into contractual privity
upon submission by the appellants of their proposals.

[52] The second ground upon which it was said that the council was
obliged to afford a hearing was an assertion that it has been ‘consistently
established’ in the decided cases that procedural fairness requires it
whenever a decision is taken that is ‘adverse to the rights or interests of a
person affected’ and that such a right has been given ‘express content in
s 3(2)(b) of PAJA’. I think that states the matter too widely.

49 2003 (2) SA 460 (SCA) paras 7 and 8.
50 2000 (4) SA 491 (T) at 504G-505B.
51 The court below had held that it did.

[53] It is correct that a person is generally entitled to be heard before a
decision is taken that adversely affects his or her rights. But that does not
hold true where the decision is adverse to no more than an ‘interest’. In
Administrator, Transvaal v Traub52 Corbett CJ pointed out that in its classic
formulation at common law the principle audi alterem partem required a
hearing before a decision was taken that prejudicially affected an individual
in his or her ‘liberty or property or existing rights’.53 That case extended the
principle to circumstances in which the interest at stake ‘falls short of a legal
right’ but ‘rises to the level of a “legitimate expectation”’ (in the words of
Professor Riggs, which were cited with approval).54 Nor does a right to be
heard when no more than an ‘interest’ is adversely affected find expression
in s 3(2)(b) of PAJA. That subsection affords a right to procedurally fair
administrative action (encompassing a right to be heard) where ‘rights or
legitimate expectations’ are affected.

[54] In President of the Republic of South Africa v South African Rugby
Football Union55 the Constitutional Court said that the question whether a
‘legitimate expectation of a hearing’ exists
‘is not whether an expectation exists in the mind of a litigant but whether, viewed
objectively, such expectation is, in a legal sense, legitimate; that is, whether the duty to
act fairly would require a hearing in those circumstances.’
In National Director of Public Prosecutions v Phillips56 Heher J, adopting
the views expressed in De Smith, Woolf and Jowell Judicial Review of
Administrative Action,57 held that

52 1989 (4) SA 731 (A).
53 Page 748G-H.
54 Page 755C-E.
55 2000 (1) SA 1 (CC) para 216.
56 2002 (4) SA 60 (W) para 27.

‘[a] legitimate expectation “arises where a person responsible for taking a decision has
induced in someone who may be affected by the decision, a reasonable expectation that
he will receive or attain a benefit or that he will be granted a hearing before the decision
is taken.”’
And that
‘[s]uch an expectation may arise “either from an express promise given on or behalf of a
public authority or from the existence of a regular practice which the claimants can
reasonably expect to continue”’
The learned judge went on to enumerate ‘requirements for legitimacy of the
expectation’ which were adopted by this court in South African Veterinary
Council v Szymanski.58

[55] In this case there has been no suggestion that the appellants were
induced by the council to believe that they would be heard before it took its
final decision. Nor was it suggested that it is the regular practice of public
bodies to afford a hearing before it rejects tenders or proposals that they
have invited. No doubt there are cases in which that should occur – that was
held to be the case in Logbro Properties – but I would be most hesitant to
lay that down as a general rule. Invitations of various kinds are regularly
issued by public bodies – whether to take up employment, or to offer to
supply goods or services, or to participate in projects of one kind or another
– and it would be most expansive to find that whenever a person responds to
such an invitation he or she is entitled to be heard before the response is
rejected.

57 5th ed para 8-037.
58 2003 (4) SA 42 (SCA) para 19.

[56] But in this case there seems to me to be even less reason to find that
the appellants had a legitimate expectation that they would be afforded a
hearing before their proposals were rejected. The appellants were made
pertinently aware of what the council considered to be their shortcomings
and were invited to make representations, which they did. The appellants
could not have been unaware that their proposals were liable to be rejected if
those concerns were not overcome. That they should expect to be afforded
yet another hearing before that step was taken seems to me to stretch
legitimacy unduly. I do not think the council can be said to have acted
unfairly in not inviting yet further representations and on that ground the
appellants must fail.

[57] The second leg of the attack was that the rejection of the appellants’
proposals was said to have been ‘irrational’ and ‘unreasonable’. PAJA does
not express itself in quite those terms. It provides, so far as it is now
relevant, that administrative action is reviewable if it is ‘not rationally
connected to … the purpose for which it was taken, [or] the information
before the administrator, or the reasons given for it by the administrator’, or
if the functionary concerned exercised his or her power or performed his or
her function in a manner that is ‘so unreasonable that no reasonable person
could have so exercised the power or performed the function’.

[58] In the ordinary meaning of the term a decision is ‘rationally’
connected (to the purpose for which it was taken, etc) if it is connected by

reason,59 as opposed to being arbitrary or capricious. As it was expressed in
Merafong Demarcation Forum v President of the Republic of South Africa:60
‘There must merely be a rationally objective basis justifying the [impugned conduct]….
In Pharmaceutical Manufacturers61 Chaskalson P made it clear that the rationality
standard does not mean that courts can or should substitute their opinions for the opinions
of those in whom the power has been vested. A court cannot interfere with a decision
simply because it disagrees with it or considers that the power was exercised
inappropriately.’

[59] On the second count – whether the decision was one that was so
unreasonable that no reasonable person could have made it – there is
considerable scope for two people acting reasonably to arrive at different
decisions. I am not sure whether it is possible to devise a more exact test for
whether a decision falls within the prohibited category than to ask, as Lord
Cooke did in R v Chief Constable of Sussex, ex parte International Trader’s
Ferry Ltd62 – cited with approval in Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs63 – whether in making the decision the functionary
concerned ‘has struck a balance fairly and reasonably open to him [or her]’

[60] When viewed together it might be that these apparently separate
grounds of review will come to the same thing. If a decision is founded upon
reason then it is difficult to see how it could be said to be so unreasonable
that no reasonable person could come to it and the converse is equally true.

59 Shorter Oxford Dictionary meaning of ‘rational’: ‘1. Having the faculty of reasoning; endowed with
reason. b. Exercising one’s reason in a proper manner; having sound judgment; sensible, sane 2. Of,
pertaining or relating to reason. 3. Based on, derived from, reason or reasoning. 4. Agreeable to reason;
reasonable, sensible; not foolish, absurd or extravagant.’
60 2008 (5) SA 171 (CC) para 63.
61 Pharmaceutical Manufacturers Association of SA: in re Ex parte President of the Republic of South
Africa 2000 (2) SA 674 (CC) para 90.
62 [1999] 1 All ER 129 (HL) at 157.
63 2004 (4) SA 490 (CC) para 44.

Indeed, the court below queried whether Sidumo v Rustenburg Platinum
Mines Ltd64 had collapsed the two grounds into a single enquiry, namely, ‘is
the decision reached by the [administrator] one that a reasonable decision-
maker could not reach?’65

[61] The appointment of either of the appellants would undoubtedly have
exposed the council to an element of risk in one form or another and neither
of the appellants was able to eliminate that risk. When confronted with the
problem each went no further than to advance reasons to the council why the
risk should be regarded as minimal. I think it goes without saying that a
decision to avoid risk in a long-term contractual relationship is neither
arbitrary nor capricious but is one that is founded upon reason – there is ‘a
rationally objective basis justifying’ the decision.66 Perhaps a more robust
decision-maker would have been willing to accept the risk but it is not for a
court to direct a contracting party to be robust. I do not think a decision that
has a rational basis can be said to be one to which no reasonable person
could come. In my view the decision was neither irrational within the
meaning of PAJA nor was it one to which a reasonable decision-maker
could not come. On the contrary, I find it perfectly understandable that the
council chose not to expose itself to the risks that presented themselves
when it was able to avoid them, no matter that the risks might have been
slight.

[62] The real basis for the complaint seems to me to have been articulated
more directly by counsel for the appellants towards the end of his argument.

64 2008 (2) SA 24 (CC).
65 See, for example, Sidumo para 110.
66 Merafong Demarcation Forum, above.

He said that the consortium was the pre-eminent expert in its field and for
that reason it was irrational and unreasonable not to appoint it. That does not
seem to me to say that the decision not to do so was irrational or
unreasonable but only that it was not the best decision. We are not
concerned with the wisdom of the council’s decision. It is the council, and
not a court, that must bear the consequences for the contracts that it
concludes, and in those circumstances, as pointed out in Logbro Properties67
and in Bato Star,68 a measure of deference to the view of the decision-maker
is not out of place.

[63] I do not think the council’s decision not to appoint the appellants
offends the provisions of PAJA, and that being so its consequent decisions
are also not liable to be set aside. In my view the order of the court below
cannot be faulted and I would dismiss the appeal. As to the costs of the
appeal the employment of two counsel was warranted and the appellants
ought also to bear the reserved costs of the application for interim relief.

[64] The appeal is dismissed. The appellants, jointly and severally, are to
pay the costs of the appeal, and the reserved costs of the application for
interim relief. The costs in each case are to include the costs of two counsel
so far as two counsel were employed.

__________________
R W NUGENT
JUDGE OF APPEAL

67 Para 21.
68 Para 46.

APPEARANCES:

For appellant:
B Leech

Instructed by:

Werksmans Incorporating Jan S de Villiers,
Johannesburg

Symington & De Kok, Bloemfontein

For 1st respondent:
P J Pretorius SC

H Barnes

Instructed by:

Moodie & Robertson Attorneys, Johannesburg

Claude Reid, Bloemfontein

For 2nd respondent:  Knowles Husain Lindsay Inc c/o John Broido,
Johannesburg