Olitzki Property Holdings v State Tender Board and Premier of the Province of Gauteng

In 1995, the Gauteng provincial government invited tenders for office accommodation to house various departments. The appellant (plaintiff) obtained an option to purchase a building and tendered to provide office space. Its tender was not accepted. The plaintiff alleged that the Tender Board and provincial government acted irregularly, unreasonably and arbitrarily during the tender process. Specifically, it alleged that: (1) the provincial government, as an interested party, improperly acted as an advisory body to the Tender Board; (2) the Tender Board failed to appraise the plaintiff's tender independently and impartially; and (3) the process was not fair, public and competitive as required by section 187 of the interim Constitution. The plaintiff claimed damages exceeding R10 million for lost profit (rental income it would have earned had it been awarded the tender). The parties agreed to have the court determine the legal foundation of the claims before leading protracted evidence. The court below (Eloff JP) upheld the defendants' challenge and set aside both claims with costs.

• Whether section 187 of the interim Constitution (procurement provision) gives rise to a civil claim for damages for lost profit when breached
• Whether breach of the administrative justice provisions in section 24 of the interim Constitution entitles a claimant to damages for lost profit as 'appropriate relief' under section 7(4)(a)
• Whether a constitutional provision imposing legislative duties can ground a delictual claim for damages before enabling legislation is enacted
• What constitutes 'appropriate relief' for breach of fundamental rights under the interim Constitution
• Whether constitutional damages for lost profit are available where alternative remedies (interdict and review) were available to the claimant

The appeal was dismissed with costs, including costs of two counsel. The order of Eloff JP setting aside both Claim A and Claim B was upheld.

Section 187 of the interim Constitution, being primarily a provision imposing legislative duties on national and provincial legislatures to create a fair, public and competitive tendering system, does not itself give rise to a direct civil claim for damages for lost profit in the absence of enabling legislation defining such remedies. The provision empowers legislatures to devise the system and determine available remedies, and it would be inappropriate for courts to infer such a substantial delictual entitlement through interpretation alone. Regarding section 24 (administrative justice), while breach of procedural fairness rights may entitle a claimant to "appropriate relief" under section 7(4)(a) of the interim Constitution, damages for lost profit will not constitute appropriate relief where: (a) the claimant had alternative and effective remedies available (such as interdict or review) which were not pursued; (b) the award would constitute a windfall to the claimant; (c) the award would have serious implications for scarce public resources; and (d) the claim effectively seeks a contractual remedy (the benefit of the bargain) based on a procedural violation. What constitutes "appropriate relief" depends on all the circumstances of each case, including the availability and adequacy of alternative remedies.

Cameron JA made several important observations beyond the strict ratio: (1) In interpreting constitutional provisions, courts must apply standards of public principle and policy, and section 35(3) of the interim Constitution (requiring interpretation of "any law" with regard to fundamental rights) applies where appropriate to other provisions of the interim Constitution itself; (2) The fact that a duty is embodied in the Constitution rather than ordinary legislation may attract delictual liability more readily, depending on the nature of the provision; (3) There may be circumstances where out-of-pocket expenses (as distinct from lost profit) could be recovered as constitutional damages, though this was not before the court; (4) The court did not foreclose the possibility that lost profit might in some circumstances constitute appropriate constitutional relief, but found it inappropriate on the particular facts; (5) The 1968 State Tender Board Act should, so far as possible, be read in conformity with section 187 to give effect to constitutional values; (6) The judgment contains extensive discussion of the proper approach to determining when breach of a statutory (or constitutional) provision gives rise to a delictual claim, emphasizing the "just and reasonable" test and considerations of public policy informed by constitutional values.

This is a foundational case in South African law establishing important principles regarding: (1) The limits of constitutional provisions as sources of delictual claims for damages, particularly where the constitutional provision is primarily directed at imposing legislative duties; (2) The distinction between different types of constitutional remedies and the circumstances in which damages (especially for lost profit/economic loss) will be "appropriate relief" under the interim Constitution; (3) The principle that availability of alternative remedies (particularly interdict and review) is a critical factor in determining whether constitutional damages are appropriate; (4) The approach to interpreting constitutional provisions that create framework obligations for legislative action; (5) Public policy considerations regarding the award of substantial damages against the State, particularly the problem of "windfalls" and the impact on scarce public resources. The case has been influential in subsequent administrative law and constitutional damages jurisprudence, establishing that not every constitutional violation automatically attracts damages, and that claimants must pursue appropriate remedies timeously.