Resultant Finance (Pty) Ltd v Head of Department for the Department of Health, KwaZulu-Natal and Another

On 2 March 2015, Resultant Finance (Pty) Ltd (the appellant) submitted a bid in response to a Request for Proposal (RFP) issued by the KwaZulu-Natal Provincial Department of Health for the provision of services to manage the leasing of medical and non-medical equipment. On 8 April 2015, the appellant was informed that its bid was successful, and a five-year contract was signed on 22 April 2015. The contract had no fixed value but was based on percentage calculation. The appellant claimed it would be worth hundreds of millions or over a billion rand. On 26 January 2016, the Health Department asked the appellant to show cause why the contract should not be cancelled due to failure to perform. A forensic investigation was launched in August 2016. On 21 April 2017, the appellant launched the first application seeking a declaratory order confirming the contract and compelling the Health Department to comply. On 13 June 2017, the Health Department cancelled the contract on grounds that the appellant had not met bid requirements, failed to secure funding, and was unable to execute the works. The MEC for Finance launched the second application on 14 September 2017 seeking review of the tender award on the basis that the appellant failed to comply with clause 2.34 of the RFP, which required bidders to submit proof of registration with the Financial Services Board (FSB). The appellant was not registered with the FSB and did not submit such proof. The appellant claimed it had entered into a cooperation agreement with Standard Bank and STANLIB (which were registered), but no proof of their registration was attached to the bid documents and the bid did not reflect a joint venture structure.

• Whether the contract arising from the procurement award was valid and should be enforced
• Whether condonation should be granted for the review proceedings launched more than two years after the impugned decision
• Whether the MEC for Finance had locus standi to review the administrative action of another provincial department
• Whether the tender award was irregular, unlawful and ultra vires due to non-compliance with bid requirements
• Whether the tender award could be reviewed on the basis of the principle of legality under section 172(1)(a) of the Constitution
• Whether the appeal should be dismissed as moot under section 16(2)(a)(i) of the Superior Courts Act where the contract term had expired before the appeal hearing

The Supreme Court of Appeal dismissed both appeals on the grounds of mootness, with costs including the costs of two counsel.

1. An appeal will be dismissed as moot under section 16(2)(a)(i) of the Superior Courts Act where the contract term has expired and the relief sought is specific performance, rendering any decision without practical effect or result. 2. Mootness is not an absolute bar to justiciability, but a court's discretion to hear a moot matter must be informed by factors including: whether any order will have practical effect; the nature and extent of such effect; the importance and complexity of the issues; the fullness of arguments; and whether there are conflicting court decisions requiring resolution. 3. An appeal will not be heard purely to determine costs in the absence of exceptional circumstances. 4. Non-compliance with mandatory tender requirements (such as submission of proof of FSB registration as required by the bid specifications) constitutes an irregularity that renders the tender award unconstitutional under section 217 of the Constitution. 5. Section 172(1)(a) of the Constitution obliges every competent court to declare invalid conduct that is inconsistent with the Constitution.

The Court observed that the appellant's non-compliance with clause 2.34 of the RFP was "self-evident" - the appellant was not registered with the FSB, did not submit proof of registration, and although it claimed to be in a joint venture with entities that were registered, it did not complete the required sections of the bid form for joint ventures and did not attach proof of their registration. The Court distinguished this case from Terra Graphics (Pty) Ltd t/a Terra Works v MEC: Department of Police, Roads and Transport, Free State Provincial Government, noting that in Terra Graphics the provincial government had received the benefits of the contractors' work but refused to pay, which constituted unconscionable conduct. In contrast, in this case no equipment had been procured and there was no clear evidence of unconscionable conduct by the respondents. The Court noted that it was "misconceived" for the appellant to argue that it needed to be successful on appeal in order to proceed with a damages claim, as it was always open to the appellant to seek damages as a remedy for alleged breach of contract. The Court observed that the court a quo's finding that the appellant had not yet procured any equipment was a relevant factor in relation to any just and equitable remedy under section 172(1)(b) of the Constitution. The judgment affirms that there is a "plethora of judgments" pertaining to review based on the principle of legality and that "the law is thus settled in this regard," citing AllPay Consolidated, Kirkland Investments, State Information Technology Agency, Buffalo City Metropolitan Municipality, Notyawa, and Valor IT.

This case illustrates the application of the mootness doctrine under section 16(2)(a)(i) of the Superior Courts Act 10 of 2013. It confirms that courts will decline to decide appeals that will have no practical effect or result, even where a party argues that a decision is necessary for future damages claims or cost orders. The judgment reinforces that mootness is not an absolute bar to justiciability, but requires consideration of several factors including whether the order will have practical effect, the importance and complexity of the issues, and whether there are exceptional circumstances warranting a decision despite mootness. The case also demonstrates the strict approach to compliance with tender requirements in public procurement. The judgment confirms that failure to comply with mandatory bid requirements (such as proof of FSB registration) renders a tender award irregular and unconstitutional under section 217 of the Constitution, which requires procurement processes to be fair, equitable, transparent, competitive and cost-effective. It affirms that section 172(1)(a) of the Constitution obliges courts to declare invalid conduct that is inconsistent with the Constitution. The case provides guidance on the factors relevant to condonation of delay in review applications, emphasizing that this is a factual, multi-factor and context-sensitive enquiry. It also touches on the circumstances in which an MEC for Finance may have standing to review procurement decisions of other provincial departments.