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Special Investigating Unit v Phomella Property Investments (Pty) Ltd and Another (1329/2021) [2023] ZASCA 45

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Special Investigating Unit v Phomella Property Investments (Pty) Ltd and Another (1329/2021) [2023] ZASCA 45

Legal gavel

5th April 2023

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Click here to read the full judgment on Saflii

[1]             This matter arises from a lease of the SALU building in Pretoria to accommodate the Department of Justice and Correctional Services (the DOJ). It was concluded between the Department of Public Works (the DPW) and the owner, Phomella Property Investments (Pty) Ltd, the first respondent (Phomella). The building and lease were subsequently transferred to the second appellant, Rebosis Property Fund Limited (Rebosis). Phomella and Rebosis were part of the same group of companies whose guiding mind was a certain Mr Ngebulana. The lease was concluded on 22 September 2009 for a period of  9 years and 11 months. It was concluded after utilising the procedure for a negotiated lease rather than an open bidding process. Authority to conclude the lease was subject to the condition that, prior to signature, an assessment of the space required by the DOJ was to be conducted. Despite this not having been done, the lease was signed.

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[2]             In February 2017, the Special Investigating Unit (the SIU), the appellant, launched an application in the Gauteng Division of the High Court, Pretoria (the high court). The initial relief sought was that the lease be reviewed and set aside as void ab initio. By the time the matter came before the high court, the lease had run its course. As a result, the SIU did not persist in that relief. It simply sought an order declaring the lease agreement to be unlawful. In addition, the SIU sought an order that Phomella and Rebosis should jointly and severally pay the Minister of Public Works the amount of R103 880 357.65. This was said to represent wasteful expenditure incurred during the lease. It was contended that an area greater than was needed by the DOJ had been leased. The figure represented the SIU’s calculation of the rental which had been paid for that excess area.

[3]             The declaration of unlawfulness was sought in terms of s 172(1)(a) of the Constitution. Two bases for this relief were relied on. First, that the DPW had failed to follow an open bidding process in concluding the lease. Secondly, and if it was found that a negotiated lease was competent, the prior requirement of a needs assessment of the space required by the DOJ had not been met. The prayer for payment of R103 880 357.65 was sought under the provisions of s 172(1)(b) of the Constitution.

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[4]             The high court, per Rabie J, declared the lease unlawful but dismissed the further relief sought by the SIU under s 172(1)(b) of the Constitution. There is no appeal against the declaration of unlawfulness which, accordingly, stands. The SIU sought leave to appeal against the refusal to make an order under s 172(1)(b) of the Constitution. That leave was granted by the high court. In essence, therefore, this appeal concerns whether the high court’s application of the provisions of s 172(1)(b) of the Constitution warrant interference by this Court.

 

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