Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality

The City of Tshwane launched a tender process in 2014 for a municipal broadband network project to develop a smart city. Altech Radio Holdings was awarded the tender in June 2015. A special purpose vehicle (Thobela Telecoms) was established and entered into a Build Operate and Transfer (BOT) agreement with the City on 5 May 2016, and a Tripartite agreement with ABSA Bank (as lender) on 4 August 2016. The total project funding was R1.335 billion. Following the August 2016 municipal elections, the DA-led coalition took control of the City. Mayor Msimanga had previously criticized the project as a "dodgy deal". Despite receiving multiple reports (SkX probity reports, KR Inc due diligence report, Auditor General report) highlighting potential irregularities, and despite initially demanding the project be expedited, the City eventually applied for an interdict and review on 22 August 2017, more than two years after the tender award. By then, the build phase was 34% complete and R610 million had been expended. The high court granted the review and set aside the tender award, the BOT agreement, and the Tripartite agreement.

• Whether the delay in bringing the legality review application was unreasonable and should be condoned
• Whether the City failed to comply with section 33 of the Municipal Finance Management Act (MFMA) regarding contracts with future budgetary implications
• Whether the BOT agreement constituted a public-private partnership requiring compliance with PPP regulations
• Whether irregularities in the tender process were material enough to warrant setting aside the agreements
• What is the appropriate exercise of remedial discretion under section 172 of the Constitution where administrative decisions are found to be unlawful

The appeal was upheld with costs, including those of two counsel. The high court's order setting aside the tender award and agreements was replaced with an order dismissing the City's application with costs, including those of two counsel.

In a legality review, despite the absence of a fixed time limit (unlike PAJA's 180-day bar), the application must be brought without undue delay. Whether delay is unreasonable involves a factual, multi-factor and context-sensitive inquiry considering: the length of delay, reasons for it, prejudice to parties, fullness of explanation, and prospects of success. Where an organ of state has knowledge of alleged irregularities but continues to act on the agreements, demands performance, and allows substantial expenditure before launching review proceedings, the delay is unreasonable and cannot be condoned without undermining reliance, accountability and rationality. A change in political administration of an organ of state does not justify delay as the entity remains a single juristic person. Not every flaw in public procurement is fatal; immaterial irregularities do not invalidate contracts. When determining whether to set aside administrative decisions under section 172 of the Constitution, courts must weigh the consequences of setting aside against not setting aside, particularly where substantial performance has occurred and innocent third parties will be prejudiced. Public procurement contracts should not be invalidated for immaterial or inconsequential irregularities.

The court made critical observations about: (1) The conflict of interest where KR Inc acted for the City in the review proceedings despite having provided due diligence, certified the agreements as lawful, and furnished opinions to lenders that were relied upon - they should not have continued to act and members were potential witnesses; (2) The egregious non-compliance with the Supreme Court of Appeal rules regarding preparation of the record - a record exceeding 5000 pages in 12 volumes plus 16 core bundle volumes and 2 index volumes, where the core bundle exceeded the main record by 750 pages, demonstrating little regard for the rules. While a punitive costs order was considered, it was not imposed given all parties were equally at fault and urgency required expedited hearing; (3) The court noted with concern the increasing reliance on legality review at the expense of PAJA, observing that "the courts made the principle of legality mean whatever they wanted it to mean"; (4) The judgment suggested the City was not truly vindicating the rule of law but using review to evade constitutional obligations and renegotiate more favorable terms, noting the City still wanted a broadband network "but on such terms [as] are more favourable"; (5) The court emphasized that organs of state have a "higher duty to respect the law" and are not "indigent and bewildered litigant[s]... to whom the courts must extend a procedure-circumventing lifeline."

This case is significant for establishing important principles regarding state self-review applications, particularly: (1) Organs of state seeking to review their own decisions must act expeditiously despite no fixed time limit in legality review; (2) Political changes in administration do not justify delay, as the organ of state remains a single juristic entity; (3) Courts will scrutinize whether self-review genuinely vindicates the rule of law or seeks to evade constitutional obligations; (4) The consequences of setting aside public procurement contracts must be carefully weighed, particularly where substantial performance and expenditure has occurred; (5) Not every flaw in procurement is fatal - perfection is not required and immaterial irregularities should not invalidate contracts; (6) Innocent third parties (including funders) are entitled to assume organs of state comply with their own formalities and act lawfully; (7) The case demonstrates the limits of using administrative law remedies to strike better commercial bargains. The judgment emphasizes that while unlawful conduct must be undone, this principle must be balanced against certainty, finality, and the prejudice to innocent parties who have relied on state decisions.