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NOT REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

JOHANNESBURG

CASE NO: 26276/01

DATE:2002-04-17

In the matter between

I W BEARING............................................................................................................... Applicant

and

INDUSTRIAL SUPPLIES CC................................................................................... Respondent

JUDGMENT

WILLIS, J: Although the application was made in Afrikaans, the applicant has agreed that in view of the wider implications of this judgment that it is appropriate that it should be given in English. I do so accordingly.

This is an application in terms of which the applicant seeks the following relief:

"1. Dat the respondent die applikant se naam onverwyld herinstel op die lys van diensverskaffers aan die respondent.

2. Koste van hierdie aansoek."

It is common cause that the applicant is aggrieved by the conduct of the respondent for having removed its name from the respondent's vendors list without prior notice to the applicant and by the respondent's failure to provide reasons therefor upon request by the applicant. It is alleged by the applicant that the removal by the respondent of its name from a vendors list constitutes unfair administrative action.

The applicant relies on section 33 of the Constitution of the Republic of South Africa Act 108 of 1996 which provides:

"Everyone has the right to administrative action that is lawful

and reasonable and procedurally fair". The applicant also relies on the provisions of section 8(2) of the Constitution which provides that:

"A provision of the Bill of Rights by a natural or a juristic person and to the extent that it is applicable taking into account the nature of the right and the nature of any duty imposed by the right."

Furthermore, the applicant relies on subsection (3) of section 8 which provides:

"When applying a provision of the Bill of Rights a natural or juristic person in terms of subsection (2) a court (a) in order to give effect to a right in the bill, must apply or if necessary develop the common law to the extent that legislation does not give effect to that right, and (b) may develop rules of the common law to limit the right provided that the limitation is in accordance with section 36(i)".

The respondent makes the following allegations in its answering affidavit:-

"13.1 On or about 15th January 2001 the respondent delivered two URYU impact wrenches ("the wrenches"! from its BMR to Mr Erasmus in order for Mr Erasmus to provide the respondent with a quotation as to how much it would cost to repair the wrenches. At the time Mr Erasmus stated it would take four weeks to provide the quotation. Respondent's intern a I/extern a I way bill in this regard is attached hereto marked "WR7".

13.2 On 6 February 2001 the applicant provided the respondent with a quotation for the repair of wrenches at a price of R5 380,00 each, excluding VAT, a copy of which is attached hereto marked "WR8". The quotation stated that the repairs would take two weeks from the date upon which the order for the repairs was confirmed by the respondent which confirmation was provided immediately as the repairs were urgent. The confirmation was however not done through my office but directly by junior supervisory personnel in the BMR and despite the fact that the applicant was not registered as a supplier or a repairer of 'tools hand' and such regular suppliers were listed on MINS-

13.3 The applicant also recorded in his quotation the alleged price of a new URYU impact wrench would have been R16 999,99.

13.4 It was common knowledge among the respondent's suppliers of services that a repair job on a commodity could only be authorised if the cost of repair was 60 per cent or less of the cost to replace such commodity with a new item. Upon enquiring with one of the respondent's listed vendors recorded on the vendor's list as providing hand tools, it was confirmed that during February 2001 the replacement cost for a new URYU impact wrench bench was R9 934,15. A copy of the telefax from this registered vendor is attached and marked "WR9". The information supplied by the applicant on "WR8: was accordingly blatantly misleading and false."

13.5 During February 2001 Mr Skelton, the respondent's consulting engineer, identified an irregularity in an invoice from the applicant (a copy of which is attached hereto marked "WR10") and requested Mr Johan Hendrik Olivier (whose confirmatory affidavit is attached hereto marked "WR1 1"), the head of the respondent's protection services, to investigate the premises of the applicant which was still recorded as 62 Miller Street, Nuffield (as recorded in the respondent's MIMS records attached hereto marked "WR3").

13.6 Upon arrival at the abovementioned address, Mr Olivier met Mr Rochart, the owner of IW who informed Mr Olivier that the applicant's premises were now situated at 67 Van Aard Road, Selection Park.

13.7 Upon arrival at 67 Van Aard Road Mr Olivier found the applicant's premises to be closed and therefore had to return on 20 February 2001 once an appointment to see Mr Erasmus had been arranged.

13.8 Questioned about the wrenches which had still not been returned to the respondent, Mr Erasmus identified two URYU impact wrenches which were on his premises (photographs which are attached hereto and marked "WR12") as the wrenches delivered to him for repairs on 13th January 2001 and which had been repaired and were now ready for delivery. The two URYU impact wrenches which Mr Erasmus identified did not appear to have been opened and repaired. Mr Olivier was not satisfied that these were the wrenches supplied to the applicant for repairs. He confronted Mr Erasmus on this issue at which point Mr Erasmus
offered to take Mr Olivier to the firm that had carried out the reconditioning and respraying.
13.9 Mr Olivier accompanied Mr Erasmus to the premises of a firm by the name of Metal Worx which was situated on the premises at 62 Miller Street where Mr Rochart had allowed Metal Worx to conduct the operations. When questioned about the wrenches Mr Brits of Metal Worx pointed out two dismantled URYU impact wrenches (photographs of which are attached hereto and marked "WR13") which he had received from the applicant for repairs and for which he had in turn quoted the applicant repair costs of R2 989,24 for the repair of both of the wrenches (a copy of the quotation is attached hereto and marked "WR14"). Such quote by Metal Worx to the applicant included the replaced casing on wrench number UW0325 and it was decidedly less than the RI0 760 amount exclusive of VAT which the applicant had quoted respondent for the repairs to both of the wrenches.

13.11 It is evident that the applicant's intention was to supply respondent with two second-hand URYU impact wrenches, the safety, quality or origin of which could not be guaranteed by applicant. In addition, such URYU impact wrenches were not the property of the respondent which had been delivered to the applicant on 15 January 2001 for repairs. Further the repairs for which the wrenches had been delivered to the applicant were being conducted by a sub-contractor whose premises and workmanship quality could also not be guaranteed and had not been approved by the respondent in accordance with its procedure as set out in paragraph 9 above. In addition, the amount of R5 380,00 charged by the applicant per wrench was more than 50 per cent of the cost of brand new URYU impact wrench. 13.12 In the light of these investigations the respondent immediately cancelled all of the orders which were given to the applicant for the provision of goods and/or services as well as all requests for quotations. The applicant was requested to return all unrepaired property of the respondent to the respondent on or before 23rd February 2001. This included the goods referred to in Annexures CJE2, CJE3, CJE4 attached to the founding affidavit which was still in the possession of the applicant in order to provide a quotation.

14. The respondent denies that it was under any obligation to explain why the applicant had been removed from the vendors lists and the reasons therefor were self-explanatory to the applicant in the context of the circumstances outlined in paragraph 13 above." In other words, to summarise the respondent's version of events which obviously is the version of events which must prevail in determining this application, the respondent did indeed remove the applicant from its vendors list for the supply or repair of engineering goods and did so because the applicant in its view was dishonest in its dealings with the respondent.

It is common cause, therefore, that there was no hearing given by the respondent to the applicant before the applicant was removed from the vendors list. In my view the matter may simply he resolved by referring to the case of Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA). The facts in that case were very much more favourable to the applicant in that matter than in the applicant in this matter. In that case there was the cancellation of an agreement concluded between an organ of State and private individual. The appellant local authority summarily terminated a contract which existed between it and the respondent in terms of which the latter undertook to fulfil certain functions and duties of the appellant. The Supreme Court of Appeal had to consider whether administrative law applied to that contract and in particular cancellation thereof, depending on whether the cancellation amounted to administrative action for purposes of section 33 of the Constitution of the Republic of South Africa Act 108 of 1996. Before dealing with the Cape Metropolitan Council case it is important to emphasise that in this case we are dealing with a commercial enterprise which made a commercial decision which did not affect the rights of either its employees or its members (shareholders). At paragraph 16 in the Cape Metropolitan Council case, Streicher JA, delivering the judgment of the court, said as follows:

"At the relevant time section 33 of the Constitution was deemed to read:-

' Every person has the right to

(a) lawful administrative action where any of their rights or interests is affected or threatened;

(b) procedurally fairness of action where any of their rights or legitimate expectation is affected or threatened;

(c) to be furnished with reasons in writing for administrative action which affects any of their rights or interests unless the reasons for those actions have been made public; and

(d) administrative action which is justifiable in relation to the reasons given for it where any of their rights is affected or threatened.'

The section is not concerned with every act of administration performed by an organ of state. It is designed to control the conduct of the public administration when it performs an act of public administration, i.e. when it exercises public power. (See President of the Republic of South Africa and Others v South Africa Rugby Football Union and Others 2000 (1) SA 1 (CC), para 166; Pharmaceutical Manufacturers Association of SA and Another: in re Ex Parte President of the Republic of South Africa and Others 2000 {2} SA 675 (CC) at paras 20, 33, 38-40.) ,„ He continues at paragraph 17:

"It follows that whether or not conduct is 'administrative action' would depend on the nature of the power being exercised (SARFU at para 14). Other considerations which may be relevant are the source of the power, the subject matter, whether it involves the exercise of a public duty and how closely related it is to the implementation of the duty (para 18). The appellant is a public authority and although it derived its power to enter into the contract with the first respondent from statute, it derived its power to cancel the contract in terms of the contract and the common law. Those terms were not prescribed by statute and could not be dictated by the appellant by virtue of its position as a public authority. They were agreed to by the first respondent, a very substantial commercial undertaking. The appellant, when it concluded the contract, was therefore not acting from a position of superiority or authority by virtue of it being a public authority and in respect of the cancellation did not by virtue of it being a public authority find itself in a stronger position than the position it would have been had it been a private institution. When it purported to cancel the contract it was not performing a public duty or implementing legislation, it was purporting."

At the bottom of paragraph 20 Streicher JA says:

"It (i.e. the appellant) purported to cancel the contractor not on the ground of being satisfied of the existence of any of the circumstances referred to in regulation 22 but on the ground that substantial fraudulent claims had actually been submitted and that such fraudulent claims constituted a material breach of contract entitling the appellant to cancel in terms of the law of contract."

In paragraph 22 he continues to say:

"I conclude that the appellant's cancellation of its contract with the first respondent did not constitute administrative action. The court a quo erred in setting aside the appellant's cancellation of its contract with the first respondent and in ordering the appellant to furnish written reasons for its decision to cancel the contract."

In the light of the decision in the Cape Metropolitan case, it seems to me obvious that when the respondent, a limited liability company, removed the applicant from its vendors list, it did not execute "administrative action" and accordingly the relief sought by the applicant must fail. I respectfully wish also to refer to the judgment of Hodes AJ in Pennington v friedgood and Others 2002 (1) SA 251 (C) where he said at paragraph 40:

"I am in agreement with the following words of Devenish,

Govender and Hulme Administrative Law and Justice in South Africa at 25:-

'Administrative action' is the conduct of public authorities and indeed private entities when they exercise public powers, perform public functions or ohliged to exercise authority in the public interest. This means that common law review now only applies in a very narrow field in relation to private entities that are required in their domestic arrangements (my emphasis) to observe the common law principles of administrative law. This applies in relation to voluntary associations, such as sporting clubs and religious organisations. With reference to the well-known Jockey Club cases and Theron and Andere v Ring van Wellington van die NG Sending Kerk in Suid-Afrika en Andere 1976 (2) SA 1 £A| (See too Government of the Self-Governing Territory of KwaZulu v Mahlangu and Another 1994 (1) SA 626 (T) at 634F-635A; De Waal, Curry and Erasmus Bill of Rights Handbook, 4th ed at 493 and 505 and Curry and Klaaren, The Promotion of Administrative Justice Act, Act 26 para [1.25].)"

I am respectfully in agreement with these words of Hodes AJ and would wish to emphasise that quite clearly the removal of the applicant from the respondent's vendors list did not touch upon the domestic arrangements of the respondent.

I can see no reason in this matter why the ordinary rule that costs should follow the result not apply.

The following order is made: The application is dismissed with

costs.

ON BEHALF OF THE APPLICANT: ADV H WEST
Instructed by:Scholtz Inc.

ON BEHALF OF RESPONDENT: ADV C J VAN DER MERWE
Instructed by:Brink Cohen Le Roux and Roodt inc.

DATE OF JUDGMENT:17 APRIL 2002

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