Internal remedies

In the unreported case of ESDA Properties (Pty) Ltd v Amathole District Municipality and Others, Case No. 2635/2014, Eastern Cape Division, Grahamstown, the High Court considered an application for the review and setting aside of a tender. Amongst other things, the High Court dealt with the question of whether the applicant had exhausted its internal remedies before launching the application.

The Amathole District Municipality advertised a tender for the lease of office space in East London, pending the ADM’s move to new offices in Stutterheim. It was awarded to Saldosol Investments (Pty) Ltd.

When ESDA, as unsuccessful bidder, brought the application, Saldosol argued that ESDA was first obliged to exhaust the internal remedies available to it in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) before starting court proceedings. Saldosol identified such remedies as the dispute resolution mechanism created by the ADM’s supply chain management policy and the internal appeal procedure contained in section 62 of the Municipal Systems Act 32 of 2000 (MSA).

The High Court rejected Saldosol’s argument. It confirmed that the dispute resolution mechanism is not an internal remedy contemplated by PAJA.

Furthermore, it confirmed that a decision such as the award of a tender can only be appealed, in terms of section 62 of the MSA, where the outcome of the appeal did not detract from the rights of the successful bidder. This was the effect of the wording of section 62. Here, a successful appeal by ESDA would undoubtedly detract from Saldosol’s rights.

Accordingly, no internal remedy was still available to ESDA and it was entitled to have brought the application.

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