REPORTABLE
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
CASE NO:   414/99
In the matter between
THE PROVINCIAL GOVERNMENT OF THE
EASTERN CAPE

1st Appellant
THE PREMIER OF THE EASTERN CAPE

2nd Appellant
THE MEMBER OF THE EXECUTIVE COUNCIL
FOR THE EASTERN CAPE DEPARTMENT OF
EDUCATION, CULTURE AND SPORT

3rd Appellant
THE MEMBER OF THE EXECUTIVE COUNCIL
FOR THE EASTERN CAPE DEPARTMENT OF
ROADS AND PUBLIC WORKS

4th Appellant
THE MEMBER OF THE EXECUTIVE COUNCIL FOR
THE EASTERN CAPE DEPARTMENT OF FINANCE
5th Appellant
and
CONTRACTPROPS 25 (PTY) LIMITED

Respondent
CORAM:
MARAIS, OLIVIER, SCOTT, STREICHER JJA et BRAND AJA
DATE HEARD:
8 MAY 2001
DATE DELIVERED      25 MAY 2001
Leases concluded by Department without reference to Tender Board – leases invalid for
want of compliance
with s 4(1) of the Tender Board Act (Eastern Cape) 2 of 1994 –
doctrine of estoppel inapplicable.

JUDGMENT

MARAIS JA

MARAIS JA:
[1] The central issue in this appeal is whether or not two leases of buildings
concluded between respondent (Contractprops 25 (Pty) Ltd) as lessor and the
Department of Education, Culture and Sport of the Eastern Cape Province as lessee
are invalid because the Department purported to enter into the leases without the
Tender Board established by the Tender Board Act (Eastern Cape) 2 of 1994 (the
Act) having arranged the hiring of the premises in terms of s 4(1) of the Act.  The
court a quo (Pickard JP) granted respondent’s application for a declaratory order
that they are not but granted leave to appeal to this Court.
[2] That provision is in these terms:
“4 (1)     Within the framework of the principles set out in the guidelines, the
Board shall have the sole power to procure supplies and services for the
Province, and, subject to the provisions of any other Act of the Provincial
Legislature, to arrange the hiring or letting of anything or the acquisition or
granting of any right for or on behalf of the Province, and to dispose of
movable Provincial property, and may for that purpose –
(a) on behalf of the Province conclude an agreement, which shall be in
writing, with a person within or outside the Republic for the furnishing of
supplies and services to the Province or for the hiring or letting of
anything or the acquisition or granting of any right for or on behalf of the
Province or for the disposal of movable Provincial property;

(b) with a view to concluding an agreement referred to in paragraph (a), in
any manner it may deem fit, invite offers and determine the manner in
which and the conditions subject to which such offers shall be made;
(c) inspect and test or cause to be inspected and tested supplies and services
which are offered or which are to have been furnished in terms of an
agreement concluded under this section, and anything offered for hire;
(d) accept or reject any offer for the conclusion of an agreement referred to in
paragraph (a);
(e) take steps or cause steps to be taken to enforce an agreement concluded
under this section;
(f) on behalf of the Province, resile from any agreement concluded under this
section and, in an appropriate case, claim damages;
(g) subject to the provisions of subsection (2), on such conditions as it may
determine, exempt any person with whom such an agreement has been
concluded from compliance with such agreement or condone the failure
or such person to comply with such agreement;
(h) subject to the provisions of subsection (2), negotiate a settlement with a
person referred to in paragraph (g), or amend the agreement concerned
with the approval of such person;
(i) issue directives to Provincial departments with regard to the procurement
of supplies and services for, the disposal of movable property of, and the
hiring or letting of anything or the acquisition or granting of any right for,
or on behalf of, the Province, in order to achieve the objects of this Act;
(j) invite expert or technical advice, and call upon any officer or employee to
provide expert or technical advice in so far as it is legally permissible for
such officer or employee to provide the required advice to the Board;
(k) exercise such other powers as may be prescribed by regulation under
section 9.”

[3]     A detailed exposition of the factual background is unnecessary.   It suffices to
say that the Department purported to conclude the leases in June 1996 without any
reference to the Tender Board, that it entered into occupation of the premises, and
that it has been paying the rent for some three years, but that it no longer wishes to
occupy the premises.  To that end it gave three months’ notice of its intention to
terminate the leases.  When its right to do so was contested by respondent, it fell
back upon the contention that the leases were void for the reason set forth in par [1]
of this judgment.
[4]     Counsel for the parties referred us to the well-known reported cases relevant
to the interpretation of statutory provisions which require formalities (such as, for
example, reduction to writing) to be complied with when certain types of
agreement are entered into.  The criteria to be taken into account in solving the
perennial problem of whether or not the legislature intended non-compliance to be
visited with invalidity were reventilated in argument.  To cite the case law yet again

will serve little purpose other than to  swell the ever growing number of
annotations of them in the law reports.  It is by now well-established that the
language of the Act, its nature and scope, the mischief it seeks to prevent, and the
consequences of visiting invalidity upon the transaction are all relevant
considerations.
[5]     Here of course we are dealing not with the form in which a statute requires a
transaction to be clothed but with something more fundamental:  the express
conferment of sole power upon a specified entity, to the exclusion of any other
person or entity, to arrange leases.  (I say “to the exclusion of any other person or
entity” because that is undeniably the plain and ordinary meaning of the words
“shall have the sole power ----- to arrange the hiring ----- of anything ----- for or on
behalf of the Province”.)  That does not mean of course that the criteria other than
language which are taken into account when the consequences of non-compliance
with statutory requirements going to form (as opposed to vires) are under

consideration are entirely irrelevant when interpreting the provision. But their
persuasive impact would have to be great indeed before a departure could be
justified from what unambiguously and plainly appears to be a severely restricted
confinement of vires to enter upon a particular kind of transaction.
[6] Far from a consideration of those other criteria casting any doubt upon the
linguistically plain meaning of the provision, in my view, they reinforce it.  As to
the nature and scope of the Act, there can be no doubt that it is designed to
interpose a Tender Board between the Province and those with whom it might wish
to contract for “supplies and services ---, the disposal of movable property ---, ---
the hiring or letting of anything or the acquisition or granting of any right”.  The
preamble to the Act and the substantive provisions of  s 2, 3, 4, 7 and 10 show that
to be so.  The Tender Board is to be appointed in a manner which gives the public
at large an opportunity to nominate candidates for half of the positions on the
Board, and to hear them being interviewed by the Executive Council.  (s 3(4).)  The

Board is to “exercise its powers and perform its functions fairly, impartially and
independently”.  (s 2(3).)  A tendering system devised by the Board “shall be fair,
public and competitive”.  (s 4(2).)  The powers conferred upon the Board by s 4(1)
are extremely wide and show the extent to which it alone has been deputed by the
legislature to regulate the procurement of supplies and services for, the disposal of
movable property of, and the hiring or letting of anything or the acquisition or
granting of any right for, or on behalf of, the Province.  The matters in respect of
which it must advise the member of the Executive Council responsible for financial
matters are:
“(a)     Promoting competition in procurement;
(b) establishing policies, procedures and practices to ensure procurement
of the requisite quality within the time available at the lowest
practicable cost, to minimise fraud, and waste in procurement and to
eliminate unnecessary overlapping or duplication of functions and
effort,
(c)
achieving greater uniformity and simplicity in procurement;
(d) promoting economy, efficiency and effectiveness in procurement;
(e)
minimising disruptive effects of Provincial procurement on particular
industries, areas or occupations;

(f)
improving understanding of Provincial procurement policy and
procedures by everyone concerned with Provincial procurement in both
the public and private sectors;
(g)
promoting fair dealing and equitable relationships among parties to
Provincial contracts;  and
(h)
any other matters relating to Provincial procurement.”  (s 10.)
[7]     All these provisions show how important a role the Tender Board is intended
to play in ensuring good governance in the field of procurement policies and
procedures and the priority accorded to fair dealing and equitable relationships
among parties to Provincial contracts.  It is difficult to see any room for the co-
existence of a power residing in other entities or persons within the provincial
administration to do, without any reference whatsoever to the Tender Board, that
which s 4(1)(a) and (b) empowers the Tender Board to do.  That the Tender Board
acts “on behalf of the Province” in arranging to hire premises or in concluding a
lease cannot derogate from the fact that s 4(1) disables the Province from acting
autonomously in that regard.  Indeed, even the Tender Board’s power to delegate
any of its powers is restricted.  Section 5(2) precludes it from doing so without the

prior approval of the member of the Executive Council responsible for financial
matters.
[8]     As to the mischief which the Act seeks to prevent, that too seems plain
enough.  It is to eliminate patronage or worse in the awarding of contracts, to
provide members of the public with opportunities to tender to fulfil Provincial
needs, and to ensure the fair, impartial, and independent exercise of the power to
award Provincial contracts.  If contracts were permitted to be concluded without
any reference to the Tender Board without any resultant sanction of invalidity, the
very mischief which the Act seeks to combat could be perpetuated.
[9]     As to the consequences of visiting such a transaction with invalidity, they
will not always be harsh and the potential countervailing harshness of holding the
Province to a contract which burdens the taxpayer to an extent which could have
been avoided if the Tender Board had not been ignored, cannot be disregarded.  In
short, the consequences of visiting invalidity upon non-compliance are not so

uniformly and one-sidedly harsh that the legislature cannot be supposed to have
intended invalidity to be the consequence.  What is certain is that the consequence
cannot vary from case to case.  Such transactions are either all invalid or all valid.
Their validity cannot depend upon whether or not harshness is discernible in the
particular case.
[10]     I have not lost sight of the qualification in s 4(1) of the Act to the
conferment upon the Tender Board of sole power to arrange the hiring or letting of
anything.  It is “subject to the provisions of any other Act of the Provincial
Legislature”.  We were not referred to any other relevant Act so that the
qualification is of no relevance in this case.
[11]     The central question therefore falls to be answered adversely to respondent
and Pickard JP’s contrary conclusion must be taken to be erroneous.  It remains to
consider an alternative contention advanced by counsel for respondent:  estoppel.
There are formidable obstacles in the way of a successful invocation of estoppel.

However, even if it be assumed in favour of respondent that estoppel was
pertinently raised in the papers (the matter came before the court a quo by way of
motion proceedings) and that all the necessary factual requirements for the doctrine
to be applicable were canvassed, this is not a case in which it can be allowed to
operate.  It is settled law that a state of affairs prohibited by law in the public
interest cannot be perpetuated by reliance upon the doctrine of estoppel.  (See Trust
Bank van Afrika Bpk v Eksteen 1964 (3) SA 402 AD at 411 H – 412 B.)
[12]     This is such a case.  It was not the Tender Board which conducted itself in a
manner which led respondent to act to its detriment by concluding invalid leases of
property specially purchased and altered at considerable expense to suit the
requirements of the Department.  It was the Department.  If the leases are, in effect,
“validated” by allowing estoppel to operate, the Tender Board will have been
deprived of the opportunity of exercising the powers conferred upon it in the
interests of the taxpaying public at large.  Here again the very mischief which the

Act was enacted to prevent would be perpetuated.  (Cf Strydom v Die Land-en
Landboubank van SA 1972 (1) SA 801 (AD) at 815 E – F.)
[13]     This is not a case in which “innocent” third parties are involved.  It is a case
between the immediate parties to leases which one of them had no power in law to
conclude and had been deprived of that power (if it ever had it) in the public
interest.  The fact that respondent was misled into believing that the Department
had the power to conclude the agreements is regrettable and its indignation at the
stance now taken by the Department is understandable.  Unfortunately for it, those
considerations cannot alter the fact that leases were concluded which were ultra
vires the powers of the Department and they cannot be allowed to stand as if they
were intra vires.
[14]     Finally, it is necessary to record that a foreshadowed application by
respondent to apply for leave to reopen the case to enable it to lead evidence to
endeavour to prove that the Tender Board did not exist in law at the time because

its appointment had not been duly promulgated, was not made.  Accordingly, no
more need be said about it.
[15]     The appeal is upheld with costs.  The order of the Court a quo is set aside
and the following order is substituted for it:
“The application is dismissed with costs”.

R M MARAIS
JUDGE OF APPEAL
OLIVIER
JA   )
SCOTT
JA   )
STREICHER   JA   )
BRAND
AJA )    CONCUR