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South Africa’s economy took a beating during 2022: a year of floods, strikes, soaring inflation and interest rates and record-breaking hours of load-shedding. One would have hoped that the worst was behind us.  Unfortunately, South Africa’s economic outlook remains lacklustre as the most recent Thomson Reuters consensus forecast indicates that the country will experience a V-shaped growth path, starting from 1.8% during 2022, dipping to 1.2% in 2023 and then recovering to 1.8% in 2024.

To stay ahead of the curve, it is important for businesses to remain agile and prepare for the rough road ahead. Review business operations and focus on the following:

• Create best and worst-case scenario budgets that help to better prepare for unforeseen challenges.
• Manage cashflow. The timing of when money flows into and out of a business can make or break a company. When times are tough, cash flow challenges can be particularly difficult to overcome as expenses are higher than usual and revenue is lower than usual. Balancing the budget could feel a bit like walking a tightrope.
• Evaluate and review expenditure items such as insurance, rental, bank charges, etc to determine if costs are market-related. It may be worthwhile to obtain quotes from competitors to gain leverage when negotiating better rates. Where possible trim excess costs.
• Identify the business’s strongest income streams, and if necessary, focus on these income streams to optimise profits.
• Cut products or services that do not generate strong profit margins for the business.
• Create market-related pricing that accounts for high inflation rates but also yields adequate profits. Businesses need to be cognisant of the pressures faced by consumers and adjust their pricing accordingly.
• Evaluate clients and their paying habits. Review payment terms and put measures and incentives in place to ensure prompt payment.
• Use social media and other free marketing platforms to communicate and promote your business.
• Explore online functionality to reduce costs and improve productivity.
• Make data-driven decisions. Ensure that financial reports are accurate and updated timeously. Analyse the business’s financial trends and evaluate forecasts before making any changes.

Businesses cannot do much to control the direction of the economy. So, it is important to focus on what can be controlled. South African businesses are known for their resilience and ability to embrace challenges. Laying the groundwork early will increase the likelihood of a business thriving. This is the time for a steady, forward-looking leadership perspective to strategise and seek more opportunities.

Aneesa Khan

Head: Finance & ICT

The Constitutional Court handed down judgment on 30 November 2022 in answer to this question.

In a unanimous judgment, the Constitutional Court had to consider whether a tenderer, deprived of success in a tender by the State’s intentional misconduct, could claim damages in delict for loss of profit.

The appeal to the Constitutional Court followed a decision of the Supreme Court of Appeal who, by a split majority, found that a contractor was not entitled to recover its lost profits in a delictual claim against the State.

The Background Facts

The project concerned the emergency procurement of a steel bulk water pipeline to serve residents of the Giyani District during a severe drought.

The Mopani District Municipality invited tenders for the construction of the water pipeline. A Joint Venture (JV) was awarded the tender and the unsuccessful tenderer applied to interdict the implementation of the tender and instituted a review of the award on the basis that the JV did not; 

• comply with the mandatory minimum criteria specified in the bid document and should have been disqualified; 

• meet the CIDB grading specified in the tender

The case was settled, by consent between the parties and the Court set aside the award and directed that the tender be re-adjudicated. The bids were re-adjudicated, and the JV was again awarded the tender.

Again the unsuccessful tenderers launched an urgent application interdicting the implementation of the tender pending a review of the second award. They alleged a dubious points allocation and pointed to the fact that the JV’s CIDB score had seemingly miraculously been elevated.

The Court granted an interdict restraining implementation of the award and the Municipality applied for leave to appeal, which suspended the operation of the interdict. The Municipality and the Joint Venture refused to give an undertaking that they would suspend operations pending the outcome of the Court case.

After endless litigation with public funds, the Supreme Court of Appeal held that “the parties to the contract had acted dishonestly and unscrupulously and the Joint Venture was not qualified to execute the contract”.

It declared the contract void and ordered the Municipality to approach the Department of Water Affairs to take steps to determine the remedial work needed to complete the pipeline and to issue, evaluate and award a tender for completion of the work.

The Department of Water Affairs subsequently called for tenders to complete work on the pipeline.

It became apparent from this that the initial tender would have cost approximately R200 million if it had been awarded to the unsuccessful tenderer and the new tender was awarded for an approximate amount of R800 million.

Claim for Damages

The unsuccessful tenderer claimed damages in delict from both the Municipality and the JV for loss of profit as a result of the award of the tender to the JV.

The High Court dismissed the successful tenderer’s action and held that the finding of bad faith, dishonesty and ulterior purpose on the part of the Municipality in the review did not, without more, give rise to delictual liability.

The High Court viewed the re-advertised tender process as affording the unsuccessful tenderer another opportunity to participate in the tender and noted that it was unsuccessful – this affected the establishment of legal causation in the courts view.

Supreme Court of Appeal Findings

The Supreme Court of Appeal, in a split judgment, dismissed the unsuccessful tenderer’s appeal in finding that it had failed to establish wrongfulness and causation. In the majority judgment the Court found that once the tender was set aside the successful tenderer lost the opportunity to bid and thus make a profit.

The Appeal Court also pointed to their ability to participate in the re-advertised tender process and on the issue of factual causation the Court found that being the highest point scorer would not necessarily mean that the tender would have been awarded to them.

The minority judgment found that deliberate dishonest conduct on the part of the State, as evidenced in this case, could attract delictual liability. They felt that the evidence established that the Municipality had intentionally and unlawfully acted to deprive the unsuccessful tenderer of success.

The Final Word

The Constitutional Court had to decide whether delictual liability attached to an intentional breach of Section 33 and 217 of the Constitution. Section 33 provides for a right to just administrative action and Section 217 deals with the requirement that procurement in the Government’s sphere is fair, equitable, transparent, competitive and cost effective.

The Constitutional Court found that the judgment in the Steenkamp case left open the question as to whether an administrative decision tainted by intentional misconduct may attract delictual liability.

The Constitutional Court had to decide whether the provisions of the Constitution, properly interpreted, allowed for the Municipality’s intentional misconduct to be actionable in delict.

The Court considered the sections of the Constitution and the provisions of the Preferential Procurement Policy Framework Act and found that Section 217 was designed primarily to protect the public interest and this militated against the imposition of delictual liability.

The Constitutional Court also considered the decision in the Gore case, which found that the State was vicariously liable for the fraudulent misconduct of its officials in a tender process which had caused economic loss.

The Constitutional Court found that the Municipality’s conduct was reprehensible and deserving of sanction. The Municipality had acted at every turn to ensure that the award was implemented and as a result, an entity plainly unsuited to implement the award squandered vast of taxpayers’ money, a project which should have cost approximately R200 million ended up costing the fiscus approximately R800 million.

The Court noted that the Municipality’s unconscionable conduct harmed the rights and interests of the residents it was duty bound to protect and violated the unsuccessful tenderers right to just administrative action and prejudiced the country generally, by squandering taxpayer money.

The Constitutional Court pointed to the provisions of PAJA and in particular, Section 33. On the principle of subsidiarity, the Court found that given the provisions of PAJA the unsuccessful tenderer had a remedy and that it was not necessary to develop the common law and in this way give rise to “two parallel systems of law”.

The Court pointed to the provisions of Section 8 (1) of PAJA, which provided that a Court in proceedings for judicial review may give any order that is just and equitable, including directing the administrator or any party to the proceedings to pay compensation.

In considering the just and equitable relief under Section 8 of PAJA, a Court would have to balance the interests of the public over the private interests of an unsuccessful tenderer to loss of profits. The Court would have to consider what just and equitable relief to grant, including setting aside the award, aside from a determination of the loss of profits.

The Constitutional Court confirmed that the Supreme Court of Appeal’s reasoning that once the tender was set aside, the unsuccessful tenderer lost the opportunity to bid and thus make a profit – which had the effect of that an unsuccessful tenderer can never sustain loss in the form of loss of profit through a breach of the principles of administrative justice - was incorrect.

They confirmed that Section 8(1)(c)(ii)(bb) of PAJA allows for compensation in exceptional circumstances and that a loss of profit could be recovered under this section, particularly where a decision/award is not set aside or corrected.

The Court upheld the findings in Steenkamp that considerations of public policy meant that negligent but honest administrative failures will now allow for a claim of compensation.

However, where the State’s misconduct is deliberate and dishonest and where substitution or remittal are not viable forms of relief, circumstances may exceptionally require compensatory relief to ensure a  just and equitable result.

In summary therefore, an unsuccessful tenderer may claim compensation under Section 8 of PAJA where the circumstances make this just and equitable.

Richard Hoal

Partner

Procurement, Construction, Engineering, and Infrastructure Law

Cox Yeats Attorneys 

Tel: 031 536 8511

Cell: 079 496 1799

FEM statistics show that for the past four years, 15% of all fatalities (an average of 11 per year) were caused by falls from various heights. This is why Construction Regulations require a fall protection plan to be developed to manage fall risk on a project. In terms of the Construction Regulations, a fall protection plan is a documented plan, which includes and provides for:

(a) All risks relating to working from a fall risk position, considering the nature of work undertaken.

(b) The procedures and methods to be applied in order to eliminate the risk of falling.

(c) A rescue plan and procedures.

In South Africa, Working at Heights is considered to occur at any place where there is a fall risk position, meaning any potential exposure to falling either from, off or into an unprotected edge. In this high-risk environment where the chance of injury or death is probable, it is vital that employees are properly trained.

Using a recognised training provider for Fall Arrest and Fall Protection training is essential. This ensures that your training: is accredited, can be included in your B-BBEE spend and that the training provider is approved by the relevant SETA.  Therefore, you will be trained on the prescribed skills that you need in order to develop a fall protection plan and perform fall arrest techniques when working at heights. Once you have successfully completed the training, you will be deemed competent to perform these tasks.

However, your competency for Working at Heights doesn’t end there. Being associated with a professional body, in this case, the Institute for Working at Heights (IWH), ensures good corporate governance practices and compliance monitoring in line with an agreed Code of Conduct and/or Ethics – essentially ensuring that best practices are adhered to within the Working at Heights industry.

Having employees that are registered with a professional body ensures that their skills remain relevant. This is necessary because equipment becomes outdated, legislation changes, the person may not have practised the specific skill for a period and the person may have become complacent. Being a professionally registered person ensures the person remains updated on a regular basis to keep performing the job at hand safely and with due diligence.

All persons that are trained in accordance with the National Qualifications Framework (NQF) standards by an accredited training provider can apply for membership of the IWH professional body and if found to be competent, such persons will be awarded a designation title – Fall Protection Planner or Fall Arrest rescue coordinator, technician or supervisor and become registered practitioners of the Institute. Obtaining a professional designation “Means a title or status conferred by a Professional Body in recognition of a person’s expertise and right to practise in an occupational field”. This ‘License to Operate’ or Permit to Operate means that the person has been found competent, medically and is bound by a Code of Conduct that is administered by the IWH.

The accredited training course will never expire; however, designations are only valid for 3 years, (except for the Mobile Elevating Work Platforms permit which is valid for 2 years), and are subject to meeting the requirements of the IWH’s professional body’s CPD policy. Following best practices and having your employees attend accredited training ensures that you will be compliant in terms of the general safety regulations and the Construction Regulations when working on site. Master Builders KwaZulu-Natal can facilitate this training for you to ensure your employees remain compliant.

Heidi Kilian

Head: Training Academy

References

Strat Training. (2020). Working at Heights Training Course [online]. Available from: https://strattraining.co.za/course-category/working-at-heights/.  [accessed: 6/1/2023]

Institute for Working at Heights. (2019). Designations [online]. Available from: https://ifwh.co.za/designations/. [accessed:6/1/2023]

The hot and dry or humid weather conditions commonly found in KwaZulu-Natal can be dangerous for workers if they are not adequately prepared. Prolonged exposure to high temperatures increases the risk of developing heat-related illnesses such as sunburn, heat exhaustion, heat stroke or heat cramps. Symptoms can range from mild to severe and in extreme cases can result in death.

Prevention is better than cure

A normal body temperature is 37°C, when it rises rapidly to 41°C, heat stress sets in.  This is a life-threatening condition that requires prompt and competent treatment.

Who is susceptible to heat-related illnesses?

• New employees – it can take up to 2 months to acclimatize to the heat in a work environment.
• Older individuals tend to be less resilient and often succumb to excessive heat exposure.
• Anybody exposed to excessive temperatures for an extended period.
• Persons under the influence of alcohol or experiencing the consequences of alcohol intake.
• Foreigners who are not used to the natural climate of the area.
• Anybody who is ill, or whose body has been weakened due to illness.

Recognizing the symptoms of heat disorders

• Extreme fatigue
• General weariness
• Muscle weakness
• Muscle cramps
• Nausea and vomiting
• Mental disturbance/argumentative
• Failure to sweat – This is extremely serious.

Treating the symptoms of heat disorders

• If a person displays one or more of the above symptoms, seek immediate assistance. Move the individual to a cool well-ventilated area.

• Attempt to reduce the core temperature of the body to below 39°C.
• Spray the victim with tepid water to simulate sweat.
• Increase air movement around the body.
• When stable, move the individual to a clinic or doctor for treatment.

The most effective way of reducing core temperature is NOT to immerse the person in ice-cold water, but rather as described above. Ice-cold water could lead to shock as the body further increases its temperature to counter the cold water. The aim should be to simulate sweating.  Obtain medical care as soon as possible – Heat stress kills.

Working in hot weather is manageable if you are prepared for it. Dress appropriately, remember to drink sufficient water, rest in cool shaded areas and recognise the signs of overheating.

Neil Enslin

Head: Occupational Health and Safety

References:

https://www.cdc.gov/disasters/extremeheat/warning.html

https://www.mayoclinic.org/diseases-conditions/heat-exhaustion/diagnosis-treatment/drc-20373253

https://my.clevelandclinic.org/health/diseases/16425-heat-illness

https://www.mediclinicinfohub.co.za/heatstroke/