The Supreme Court of Appeal on Monday dismissed with costs an application for leave to appeal filed by New Dawn Technologies and Valor IT.
The case concerned part of a contract for an electronic document management system for the Ministry of the Interior.
The Supreme Court of Appeal dismissed the request because it concluded that “there is no reasonable chance of success in an appeal and there is no other compelling reason why an appeal should be heard” .
Invitations from the two companies total R 630 million, New Dawn Technologies claiming R 602 million and Valor IT claiming R 28 million.
The sum of these amounts amounts to approximately one-third of the ministry’s audited contingent liability of R 2.1 billion in fiscal year 2019/2020.
The contingent liabilities, that is to say the amount of the receivables, are recorded when the summons are issued and are not deleted until the judgment has been rendered.
The contingent liability of R 2.1 billion is the value of claims against the ministry, not an amount owed.
The judgment comes after the Auditor General warned in January 2021 that potential claims against the ministry were too high and could jeopardize operations and service delivery if they became payable in a fiscal year.
Home Secretary Dr Aaron Motsoaledi welcomed the court’s decision on Monday.
“The judgment frees up time and resources for leaders to allow senior management to continue to focus on the urgent task of providing services to people and fighting corruption.
“It also helps us to implement the recommendations of the Auditor General,” Motsoaledi said.
He said the judgment also provides an incentive to actively manage the risk of possible future claims against the department by bringing pending claims to court or defending them, including looking at alternative dispute resolution mechanisms.
The minister added that a large number of possible future claims against the ministry remained on the ministry’s books because they were not finalized in court.
Motsoaledi called on the department’s leadership to be more proactive and bring cases to the list of possible liability in court, even when the complainant took no further action after issuing a subpoena.
Last year, the North Gauteng High Court found that there was no legally binding contract between the department and the two companies for the provision of an electronic document management system.
In his judgment, Judge J Davis ruled that: “Both New Dawn and Valor IT were unsuccessful in their allegations that agreements had been reached between them and DHA regarding parts of a management system. electronic documents for which the offers (RFB 458) had been made in 2005 with the closing date of January 31, 2006.
“The call for tenders for EDMS was for a 3-year project, a period that has long since expired without EDMS ever being implemented.
“On November 26, 2020, this Court found that no award in accordance with the legal requirements and the conditions contained in the tender documents had been made to either of the candidates. Consequently, no binding agreement has been reached between the two parties … “
New Dawn Technologies has since taken the matter to the Constitutional Court and the department is opposing the request.
Valor IT has since withdrawn its claim against the department.
As a result, the Minister instructed the Department to pursue its legal costs against Valor IT, which date back to 2010 when the initial claim was filed.
The recovery of costs against New Dawn will be determined by the outcome of the decision of the Constitutional Court.