THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1112/2018
In the matter between:
ZIKHULISE CLEANING MAINTENANCE &
TRANSPORT CC                                                                             APPELLANT
and
THE CHAIRMAN OF THE INVESTIGATING
COMMITTEE OF THE CONSTRUCTION
INDUSTRY DEVELOPMENT BOARD                           FIRST RESPONDENT
TSELISO MAKHETHA NO                                    SECOND RESPONDENT
SIYABULELA MAGAGA NO                                    THIRD RESPONDENT
WERNER BOUWER NO                                         FOURTH RESPONDENT

Neutral citation:  Zikhulise Cleaning Maintenance & Transport CC v The
Chairman of the Investigating Committee of the Construction Industry
Development Board (1112/2018) [2019] ZASCA 181 (2 December 2019)

Coram:
Leach, Saldulker and Mocumie JJA, Koen and Weiner AJJA
Heard:
11 November 2019

Delivered: 2 December 2019

Summary: Construction Industry – Regulations promulgated under s 33 of
Construction Development Board Act 38 of 2000 – inquiry under reg 29 –
whether conduct complained of constituted breach of Code of Conduct published
under s 5(4) of Act – conduct subject of complaint not relating to construction

procurement process, therefore not constituting breach of Code of Conduct –
Regulation 28 and 29 – Failure to comply with investigatory provisions necessary
for valid inquiry under reg 29.

________________________________________________________________
ORDER
________________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Hughes J sitting
as court of first instance):

The appeal succeeds with costs, including the costs of two counsel.
The order of the court a quo is set aside and substituted with the following:

‘(a) The application is upheld with costs, including the costs of two

counsel.

(b) The order dated 24 July 2014 of the Investigating Committee appointed

under reg 29 to inquire into conduct of the Applicant, is set aside and

replaced with the following:

“The charges against the applicant are dismissed.”’

________________________________________________________________
JUDGMENT
________________________________________________________________
Leach JA (Saldulker, Mocumie JJA and Koen, Weiner AJJA concurring)

[1] The appellant is a close corporation presently registered as a contractor
under the Construction Industry Development Board Act 38 of 2000 (the Act). It
unsuccessfully applied to the Gauteng Division, Pretoria to review a decision

taken by the first respondent, an investigating committee, not to dismiss certain
charges brought against it in an inquiry under reg 29 of the regulations
promulgated under the Act. The appeal to this court against that decision is with
the leave of the court a quo.

[2] It is necessary to place the dispute between the parties in its statutory
setting. The Construction Industry Development Board (the Board) was
established under s 2 of the Act, having the objects set out in s 4. These include
the determination and establishment of best practice that promotes improved
industry stability, improved industry performance, efficiency and effectiveness.1
Further objectives include promoting best practice and improved performance of
both public and private sector clients, contractors and other participants in the
construction delivery process,2 as well as developing projects that promote best
practice. 3

[3] The powers, functions and duties of the Board, set out in s 5 of the Act, are
wide-ranging. In terms of s 5(4) it is obliged to promote uniform and ethical
standards within the construction industry and, to that end, to ‘publish a code of
conduct for all construction related procurement and all participants in the
procurement process’.4 Pursuant to this, on 31 October 2003 the Board published
a code of conduct in the Government Gazette5 (the Code).

[4] Chapter 3 of the Act deals with the registration of contractors. Under its
heading, the stated purposes of the chapter include the following:
‘. . . to establish a public sector register of contractors that will support risk management in the
tendering process; reduce the administrative burden associated with the award of contracts; . . .

1 Section 4(c) of the Act.
2 Section 4(d) of the Act.
3 Section 4(h) of the Act.
4 Section 5(4)(a) of the Act.
5 Board Notice 127, GG 25656, 31 October 2003.

assess the performance of contractors in the execution of contracts and thus provide a
performance record for contractors; regulate the behaviour and promote minimum standards
and best practice of contractors . . .’

[5] With such end in view, Chapter 3 contains various provisions relevant to
the registration of contractors. Inter alia, and these were of importance in regard
to the decision of the court a quo:
(a) Section 16(1) obliges the Board to establish a national register of contractors
‘which categorises contractors in a manner that facilitates public sector
procurement and promotes contractor development.
(b)  Section 16(6) prescribes that a contractor may apply to the Board for
registration.
(c)  Section 16(4) obliges every organ of state to ‘apply the register of contractors
to its procurement process.'
(d)  Section 17 obliges the Board to keep and maintain a register of those
contractors who have been registered with it.
(e)  Section 20 prescribes that registration by the Board will be valid for a period
of three years.

[6] Section 18 of the Act goes on to provide, inter alia:
‘(1)
A contractor may not undertake, carry out or complete any construction works or
portion thereof for public sector contracts, awarded in terms of competitive tender or quotation,
unless he or she is registered with the Board and holds a valid registration certificate issued by
the Board.
(2)
Any contractor who carries out or attempts to carry out any construction works or
portion thereof under a public sector contract and who is not a registered contractor of the
Board in terms of this Act, is guilty of an offence and liable, on conviction, to a fine not
exceeding ten per cent of the value of the contract so carried out.
(3)
A contractor referred to in subsection (2) must, upon receipt of a written notice by the
Board served on him or her in the prescribed manner, cease to continue any public sector
construction work.’

[7] As appears from all of this, contractors are not obliged to be registered with
the Board. However, organs of state may only apply their procurement processes
to registered contractors; and unregistered contractors may not carry out or
attempt to carry out construction works under public service contracts. This is a
very real inducement for contractors to have themselves registered under s 16.

[8] On 9 June 2004, the Minister of Public Works promulgated the
Construction Industry Development Regulations under s 33 of the Act6 (the
Regulations). Inter alia, they provide for procedures relating to investigations into
complaints concerning contractors and the holding of a formal inquiry into such
a complaint if, following such investigations, the Board is satisfied that sufficient
grounds exist to do so. I shall deal with these in more detail in due course.

[9] Pursuant to the provisions of s 16 described above, the appellant was
registered as a contractor for a period of three years from 1 December 2005 to
30 November 2008 whereupon such registration lapsed under s 20. It was again
registered from 31 March 2009 until the end of March 2012 and thereafter again
for a further three year period with effect from 19 September 2012.

[10] Shortly after this last registration, the Board served a notice dated 25 April
2013 on the appellant. Signed by the Acting Chief Executive Officer of the Board,
it informed the appellant that it had been the subject of an investigation conducted
under the Regulations in which evidence had been obtained indicating that it had
contravened the Act or the Regulations or the Code. In this regard it particularised
20 charges. It concluded with a statement that the Board would be instituting a
formal inquiry into these charges before an investigating committee, and called
on the appellant to indicate in writing within 21 days whether it admitted or
denied the charges.

6 Published under GN R692, GG 26427, 9 June 2004 as amended from time to time.

[11] The investigating committee the Board appointed to carry out this inquiry
consisted of the first respondent as its Chair and two additional members, the
second and third respondents (for convenience I shall refer to them simply as the
Committee). The fourth respondent, an advocate, was appointed by the Board to
act as prosecutor or evidence leader at this inquiry. I should mention that only he
appeared on appeal, and the other respondents abide the decision of this court.

[12] Prior to the inquiry before the Committee, the appellant’s attorneys
formally objected to the charges, contending that they did not disclose any
offence, that they were vague and embarrassing and that, in any event, there were
no provisions in the Code that could be offended by the conduct allegedly
perpetrated. At the outset of the inquiry, the appellant argued its objections before
the Committee and asked for the charges to be dismissed. The Committee,
however, refused to do so and dismissed the objections. This led to the review
proceedings which are the subject of this appeal.

[13] In the court a quo, the appellant’s challenge to the ruling of the Committee
was based on four separate grounds. First, it alleged the Committee lacked
jurisdiction as the conduct which was the subject of the charges allegedly
occurred at a time when it was not registered as a contractor in terms of the Act.
Second, it contended that the charges did not amount to conduct envisaged by the
Code (specifically it was alleged that the Code governed conduct between the
parties to the Code and not between contractors such as the appellant and the
Board). Third, it alleged the Committee had failed to comply with the
requirements of reg 28 (to which I shall return in due course) which, so it was
argued, was necessary before a valid inquiry could be held. Finally, it was alleged
there had been an undue lapse of time before the inquiry had been instituted and
this, coupled with the fact that the inquiry related to conduct which it averred had
been condoned by the Committee, rendered the inquiry unfair.

[14] In dismissing the review, the learned judge a quo dealt with the first of
these grounds. She concluded that the fact that the appellant may not have been
registered as a contractor at the time of the conduct that was the subject of the
charges, was no impediment to the inquiry being held. On the strength of this
finding alone, she dismissed the review, ignoring the second, third and fourth
points, any one of which would in itself, if upheld, have allowed the review to
succeed. Why she did so, or whether she merely overlooked these other grounds,
is known only unto her. It was raised as a ground of appeal in the appellant’s
application for leave to appeal to this court, but the learned judge avoided the
issue in her judgment on that application, stating that she had dealt with ‘as much
as that which was relevant’ in her judgment. Unfortunately, she had not. Her
failure to deal with certain of the grounds of review remains a mystery. Although
this cuts across the appellant’s constitutional rights of access to the courts,7 it can
be cured by this court considering the other grounds advanced in the court a quo.

[15] Although, as I have said, the court a quo decided the matter merely by
finding against the appellant on the first of the grounds challenging the
Committee’s decision, counsel for the appellant did not seek to impugn the
correctness of that decision. Instead he argued that both the second and third
points were themselves determinative of the matter, so that even if the court a quo
had been correct on the first ground, they would, if upheld, dispose of the appeal
in the appellant’s favour. Thus, whether the court a quo was correct or not in
regard to the first ground, need not detain us.

[16] I therefore turn to consider the argument that the charges did not relate to
conduct which was susceptible to an inquiry. As a starting point, it is necessary
to remember that s 29(1) of the Act prescribes that the Board may ‘for the
purposes of enforcing the [Code] convene an inquiry into any breach of the

7 Strategic Liquor Services v Mvumbi NO & others 2010 (2) SA 92 (CC) paras 16-18; [2002] ZASCA 17.

[Code] and must conduct the inquiry in the prescribed manner’. Any conduct that
does not constitute a breach of the Code therefore falls beyond the aegis of such
an inquiry.

[17] The Code was published by the Board under s 5(4) of the Act to operate as
‘a code of conduct for all construction related procurement and all participants in
the procurement process’. This clearly limits the Code’s operation to such
participants and construction related procurement processes. That is also obvious
from the terms of the Code itself. It states in its preamble that a code of conduct
for all ‘participants in the construction procurement process’ is a necessary
condition for the development of the construction industry. Further stating that it
is intentionally widely cast so as to avoid what it refers to as ‘the pitfall of detail’,
it records that it ‘applies to the various parties involved in public and private
procurement relating to the development, extension, installation, repair,
maintenance, renewal, removal, renovation, alteration, dismantling or demolition
of a fixed asset including building and engineering infrastructure’. Thereafter,
after having described what is meant by an agent, contractor, employee,
representative, subcontractor and tenderer, it goes on to prescribe how those
parties should deal with each other in construction related procurements (eg by
behaving equitably, honestly and transparently and to comply with all applicable
legislation and associated regulations), before stating:
‘The [Code] serves to establish the broad framework within which an action, or default, by any
party to the procurement process may be judged. Any action, or default, which conflicts with
the Code, is unacceptable.’ (My emphasis.)

[18] The remainder of the Code, save in conclusion for a brief exhortation to
those working in the construction industry to toe the line upon pain of proceedings
under s 29, consists of examples of what constitutes acceptable conduct on the
part of various parties in the construction industry. In respect of a contractor it
reads:

‘Conduct of the contractor
The contractor or his employees should:
Undertake the contract with the objective of satisfying the requirements of the employer by
observing the spirit as well as complying with the letter of the contract and, in pursuit of this
objective, co- operate with all other parties in the procurement process.
Aim to meet all statutory and contractual obligations fully and timeously in regard to conditions
of employment, occupational health and safety, training, fiscal matters etc.
Not attempt to influence the judgement, or actions, of agents, employees, or representatives by
inducements of any sort.
Employ subcontractors only on the basis of fair, unbiased, written subcontracts.
Not engage in unfair or unethical practices in dealings with subcontractors.
Not make spurious claims for additional payment or time.
Not approach any representative directly in connection with a contract, save for a legitimate
purpose.
Not undermine the development objectives of the employer through tokenism or fronting.
Not engage in collusive practices that have direct or indirect adverse impacts on the cost of the
project to the employer.’

[19] These examples clearly illustrate what had been set out in writing, namely,
that the Code relates to acceptable conduct on the part of various parties in the
procurement process in the construction industry. Any doubt about this is
expunged by reg 27A. Inserted into the Regulations8 on 14 November 2008, it
provides as follows:
‘27A Application of code of conduct – The code of conduct applies to all construction-related
procurement and all participants involved in the procurement process, from the application for
registration as a contractor, through to the tender process and the registration and completion
of a project, including participation in the best practice project assessment scheme and the best
practice contractor recognition scheme.’

8 By r 23, GN R1224.

[20] The relationship between participants in the procurement process and the
Board, on the other hand, is governed by the Act and Regulations, and is enforced
by way of criminal sanction. Thus:
(a)
Section18(2) makes it an offence for a contractor who carries out out
construction work under a public sector contract, or attempts to do so, if it is not
a registered contractor of the Board.
(b)
Regulation 28(b) prescribes that a contractor whose registration is
downgraded by an investigating committee after an inquiry under reg 29, and who
applies thereafter for its original grading or another higher grading but fails to
disclose the grade from which it was downgraded, is guilty of an offence.
(c)
Regulation 30(1) provides:
‘Any person or organ of State who
(a)
supplies the Board with false information to mislead the Board;
(b)
fails to register a project in terms of these Regulations;
(c)
awards a construction works contract contrary to these Regulations; or
(d)
fails to comply with these Regulations,
is guilty of an offence and is liable to a fine not exceeding R100 000.00.’

[21] From this analysis, it is clear that relations between the Board and parties
to the construction procurement process are solely governed by the Act and the
Regulations. On the other hand, good practices between parties to the
construction procurement process are governed by the Code.

[22] This is where things start to go wrong for the respondents. As mentioned,
the charges in respect of which the inquiry was convened, were contained in the
notice of 23 April 2013 addressed to the appellant by the Board. They were the
following:

Charges 1 and 2
These related to tax clearance certificates, it being alleged that invalid or false or
forged tax clearance certificates were submitted to the Board on behalf of the
appellant.
Charges 3 to 5
These related to deficiencies and differing financial figures reflected in various
annual financial statements submitted by the appellant to the Board which were
either incorrect or did not reflect the true financial position of the appellant.
Charges 6 to 11
These related to the alleged submission of false or inaccurate or forged
documentation or information relating to the appellant’s qualified professionals
which had been submitted on behalf of the appellant to the Board.
Charge 12
It was alleged that the appellant had submitted false or inaccurate information to
the Board in regard to construction works performed during a specific contract.
Charges 13 to 17
These related to the failure to disclose to the Board that a particular person
involved with the appellant had been convicted on charges of fraud.
Charges 18 to 20
These alleged that the appellant had failed to disclose the criminal conviction of
the person mentioned in charges 13 to 17 in three compulsory enterprise
questionnaires submitted to the KwaZulu-Natal Department of Public Works.

[23] These charges, if established, may possibly have constituted an offence
under the Act or the Regulations (about which I express no views). But, save for
the last three, they do not deal with breaches of the Code which governs the
management of procurement processes. Rather they relate to dealings between
the appellant, as a contractor, and the Board. Only the three last charges can be

seen as in any way involving the appellant and another party to the procurement
process (in those cases the Department of Public Works as an employer).

[24] This was glossed over in argument, with both parties seemingly accepting
that none of the charges related to conduct falling within the ambit of a
procurement process. However, it was incumbent upon the appellant, as applicant
in the court a quo, to establish that to have indeed been the case and it really did
not help its cause by merely submitting, as it did in its heads of argument (which
I should immediately record were not prepared by leading counsel who appeared
on its behalf in this court) that charges 18 to 20 are not covered by the Code of
Conduct as they ‘involve the interaction between the appellant and another
department of State’. I see no reason why if a department of State is an employer,
as was stated in charges 18 to 20 to have been the case, the relationship between
such department and contractor should not be regarded as part of the procurement
process in respect of which the Code applies. I am therefore of the view that
although the first 17 charges, even if established, do not involve breaches of the
Code, the same cannot be said of counts 18 to 20.

[25] Insofar as the first 17 charges are concerned, however, in the light of my
conclusion that the conduct to which they refer cannot be construed as breaches
of the Code, both the Committee and the court a quo erred in not concluding that
they fell beyond the ambit of any conduct into which an inquiry under reg 29
could be held. They ought to have reached the contrary conclusion, and on that
basis alone, dismissed those charges for lack of jurisdiction.

[26] In the light of the finding that the final three charges survived the
jurisdictional requirement that they constitute breaches of the Code, it becomes
necessary to consider the second ground relied upon by the appellant in this
appeal, namely, the failure to comply with the prescribed procedures relating to

an inquiry. As indicated, s 29(1) of the Act provides that for the purposes of
enforcing the Code, the Board may convene an inquiry into any breach of the
Code and ‘must conduct the inquiry in the prescribed manner’. The manner so
prescribed is that set out in the Regulations, to which I now turn.

[27] Regulation 28 provides for a preliminary investigation pursuant to a
complaint having been received by the Board, and the latter having reasonable
grounds to suspect that there has been a breach of the Code which requires it to
appoint an investigating officer to investigate the complaint or suspicion. Under
reg 28(3) the investigating officer is obliged to verify whether the Board has
jurisdiction to investigate the complaint or suspicion and that reasonable grounds
exist for the complaint or suspicion, before commencing with the preliminary
investigation. If satisfied that the necessary criteria have been met, the
investigating officer is obliged under reg 28(6) to investigate the matter, and
obtain evidence to determine whether the Board may take any action against the
implicated person. After the conclusion of such investigation, the investigating
officer is obliged under reg 28(8) to submit a report to the Board containing the
evidence obtained, his or her conclusions and the reasons therefore; whether in
the investigating officer’s opinion the person implicated by the complaint or
suspicion has breached the Code of Conduct; and, finally, a recommendation
regarding the action that the Board should take. After considering this report,
reg 28(9) requires the Board to ‘act in accordance with the recommendation of
the investigating officer if . . . satisfied that sufficient grounds exist for such
action’. It is only pursuant to this that a formal inquiry can be held under reg 29(1)
if the Board, after due consideration of the report of the investigating officer, is
satisfied that one should be held.

[28] Finally, I must mention that if an organ of state other than the Board
undertakes an investigation and finds that a person acted contrary to or has

omitted to act in terms of the Code, the procedure is somewhat truncated. In that
event, under reg 28(10) the relevant organ of state is to provide the Board with
its findings and all other documentation relevant to its investigation. Upon receipt
thereof, the Board under reg 28(11) must refer the matter to the investigating
officer appointed by the Board under reg 28(1). Thereafter, the investigating
officer is obliged under reg 28(12) to submit a report to the Board, containing a
statement of whether in his opinion the person implicated has acted contrary to
the Code, and a recommendation regarding the action the Board should take.

[29] Bearing these requirements in mind, I turn to the facts of this matter. On
27 August 2010, acting in terms of s 2(1) of the Special Investigating Units and
Special Tribunals Act 74 of 1996 (the SIU Act), the State President referred
various allegations relating to the affairs of the Department of Public Works in
the KwaZulu-Natal Province for investigation.9 Pursuant to this, a special
investigating unit (SIU) approached Mr Moola, a programme manager at the
Board, who on 28 June 2012 and 27 September 2012, respectively, provided
affidavits in relation to the registration of the applicant as a contractor. In addition
to this, a private forensic investigator, Mr Allan Nixon, was engaged by the SIU
to conduct an investigation on its behalf into the appellant’s dealings with the
Board and the KwaZulu-Natal Department of Public Works. A full report was
issued by Mr Nixon to the SIU at the conclusion of its investigation. The Board
obtained this report and then instructed the fourth respondent to peruse it and draft
a notice to the appellant. This he did. The notice he drafted was the document
dated 25 April 2013, informing the appellant of the inquiry, setting out the 20
charges and calling on the appellant to indicate whether it admitted or denied such
charges.

9 Proclamation R 43, GG 33506, 27 August 2010.

[30] Mr Nixon, who conducted the investigation at the request of the SIU and
prepared the report which was provided to the Board, was not appointed by the
SIU as required by s 3(2) of the SIU Act. Instead his relationship was stated in
his letter of appointment as remaining ‘that of a company and an independent
contractor’. The investigation was thus not conducted by an organ of state, other
than the Board, and the provisions of reg 28(10) to reg 28(12) are therefore of no
application.

[31] In these circumstances, at best for the respondents, on receipt of the report
the Board was obliged under reg 28(1) to appoint an investigating officer to
investigate any complaint against the appellant or suspicion involving it –
whereafter the procedure that I have already outlined above in reg 28(2) to
reg (28)(8) had to be followed – involving the steps the investigating officer was
obliged to take. The investigating officer in the present matter, Mr Makhubu, took
no such steps. Instead he merely passed Mr Nixon’s report onto the fourth
respondent. Moreover he did not submit a report to the Board as required in
reg 28(8). Nor did the Board on receipt of such a report (as none was made)
decide to act under reg 28(9) in accordance of the recommendation of the
investigating officer – as there was no such recommendation. Instead the fourth
respondent decided to go ahead and drafted the notice containing the charges on
behalf of the Board.  And even if the report of Mr Nixon on behalf of the SIU
could be regarded as that of an organ of state (which for the reasons I have given
it was not), the provisions of reg 28(12) – which required the investigating officer
to submit a report to the Board containing a statement and recommendation which
the Board was to consider before deciding to hold an inquiry under reg 29 – were
in any event not complied with.

[32] It was argued on behalf of the respondents that although the strict
procedures outlined in the Regulations were not followed, there had been

substantial compliance. In a case such as this, it is necessary to ‘follow a common
sense approach by asking the question whether the steps taken by [the
respondents] were effective to bring about the exigibility of the claim measured
against the intention of the Legislature as ascertained from the language, scope
and purpose of the enactment as a whole and the statutory requirement in
particular’. See Weenen Transitional Local Council v Van Dyk 2002 (4) SA 653
(SCA) para 13 approved by the Constitutional Court in African Christian
Democratic Party v The Electoral Commission & others 2006 (3) SA 305 (CC)
para 25 in which O’Regan J also stated that the issue is whether what was done
‘constituted compliance with the statutory provisions viewed in the light of their
purpose’. As Froneman J subsequently remarked in Allpay ‘[t]his is not the same
as asking whether compliance with the provisions will lead to a different result’.10

[33] Adopting such a common sense approach, it seems to me to be clear that
the decision to bring the charges in the inquiry was not preceded by the statutory
requirements of investigation. The answer to the respondent’s contention of
substantial compliance is that there had been no compliance at all. The prescribed
processes had just not been followed, and it does not help for the fourth
respondent to argue, as essentially he did, that if they had, been the charges would
in any event have been laid.

[34] The result is that the validity of the reg 29 inquiry fails at the hurdle of
legality. In these circumstances, all the charges fail by reason of the procedural
irregularity  just mentioned, and the first 17 charges fail further by reason of their
not amounting to breaches of the Code. For these reasons, all the charges against
the appellant should have been dismissed. The Committee erred in not doing so,

10 Allpay Consolidated Investment Holdings (Pty) Ltd & others v Chief Executive Officer, South African Social
Security Agency & others 2014 (1) SA 604 (CC) para 29; [2013] ZACC 42.

and the court a quo erred in not upholding the appellant’s application for review
of the Committee’s decision not to do so. The appeal must therefore succeed.

[35] It is therefore ordered:
The appeal succeeds with costs, including the costs of two counsel.
The order of the court a quo is set aside and substituted with the following:

‘(a) The application is upheld with costs, including the costs of two

counsel.

(b) The order dated 24 July 2014 of the Investigating Committee appointed

under reg 29 to inquire into conduct of the Applicant, is set aside and

replaced with the following:

“The charges against the applicant are dismissed.”’

__________________
L E Leach
Judge of Appeal

Appearances

For the Appellant:  J Gauntlett SC QC (with him J E Howse)
Instructed by:
Garlicke & Bousfield c/o VDT Attorneys, Pretoria

Symington De Kok, Bloemfontein

For the Respondent:  D B du Preez SC
Instructed by:
Werner Kruger Attorneys c/o Lombard & Partners, Pretoria

Hill McHardy & Herbst Inc, Bloemfontein