Court name
High Court Main Division
Case number
HC-MD-CIV-MOT-REV-2019/00203
Case name
Advantage YR (Pty) Ltd v Mobile Telecommunications Co
Media neutral citation
[2020] NAHCMD 314
Case summary:

Administrative law – Administrative action – What constitutes – Commercial activity of a state owned public enterprise – Tender for the rendering of advertising services for MTC awarded to a competitor of the applicant – MTC incorporated as a private company although state-owned – Decision to award the tender for advertising services and enter into the resultant agreement taken by its directors acting in terms of the articles and memorandum of association of the company and not in terms of any public authority – Decision in question purely a contractual one and not an adm

Headnote and holding:

The facts appear from the judgment.

 

 

REPUBLIC OF NAMIBIA 

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

EX-TEMPORE JUDGMENT

                                                                                                                                                       

In the matter between:                                Case no: HC-MD-CIV-MOT-REV-2019/00203

 

ADVANTAGE Y&R (PTY) LTD                                                                      APPLICANT

 

and

                                                                                                                                                    

MOBILE TELECOMMUNICATIONS

COMPANY LIMITED                                                                      FIRST RESPONDENT

ADFORCE NAMIBIA (PTY) LTD                                              SECOND RESPONDENT

 

Neutral citation:      Advantage Y&R (Pty) Ltd v Mobile Telecommunications Company Limited (HC-MD-CIV-MOT-REV-2019/00203) [2020] NAHCMD 314 (16 June 2020)

 

Coram:          GEIER J

Heard:            16 June 2020

Delivered:     16 June 2020

Released on:  24 July 2020

 


ORDER


 

1.         The application to compel, dated 1 August 2019, is hereby dismissed with costs, such costs, where applicable, are to include the costs of one instructed- and one instructing counsel.

 

2.         The case is postponed to 01 July 2020 at 08h30 for a status hearing.

 


JUDGMENT


 

GEIER J:

 

[1]        The central issues which require determination in this case are whether or not the first respondent in this matter is an administrative body and whether its decision to award a tender, to a competitor of the applicant, thus constitutes administrative action for purposes of compelling the first respondent to produce the relevant “review record”. 

 

[2]        The applicant, Advantage Y&R (Pty) Ltd, an advertising agency, takes the view that MTC, the first respondent, a public company incorporated under the Companies Act 28 of 2004, is obliged to produce the review record, whereas MTC and the second respondent, Adforce Namibia (Pty) Ltd, the successful tenderer in this instance, resist such production. 

 

[3]        The factual background to this dispute is briefly as follows:

 

‘10.    During June 2018 MTC invited advertising agencies to submit bids for the selection and appointment of a full service advertising agency. 

 

11.       Advantage Y&R Advertising (Pty) (“Advantage Advertising”) submitted its bid on 6 July 2018.  It was shortlisted to present its bid to MTC on 31 August 2018, which Advantage Advertising did.[2]

 

12.       On 26 October 2018 MTC informed Advantage Advertising that it had to present its bid again, but this time before a differently composed panel.[3]

 

13.       Reasons for this decision were requested by Advantage Advertising but not given.  Advantage Advertising complied with the decision by MTC and presented its bid before the newly constituted panel on 7 November 2018.[4]

 

14.       During March 2019 Advantage Advertising was informed by MTC that its bid was unsuccessful. Again reasons for the decision were requested but not given.[5]

 

15.       Unhappy with the tender process and the decision by MTC, Advantage Advertising approached this court.  It seeks to review and set aside the decision by MTC to call for a re-pitch in front of a differently constituted panel, and the decision to award the tender to Adforce Namibia.

 

16.       MTC opposed the application but failed to supply the review record as required by rule 76(2)(b).  It takes the positon that rule 76 does not apply to its decision, giving the following reasons:

 

a.         it is not an administrative body;

 

b.         the award of the tender to Adforce Namibia is a purely commercial decision and therefore not reviewable administrative action;

 

c.         the information constitutes sensitive commercial information which should not be disclosed at all or in its entirety.’[6]

 

Argument on behalf of Advantage

 

[4]    In support of his client’s quest for the discovery of the record, Mr Marcus submitted that MTC is a commercial organ of the State. In this regard the argument ran further that: 

‘25.    Although MTC is registered as a company in terms of the Companies Act, it is wholly owned by the Government. By definition it is a ‘state-owned company’.   
 

 

​​​​26.       The Namibia Post and Telecom Holdings limited (NPTH) is the sole shareholder of MTC.  NPTH is established under the Post and Telecommunications Companies Establishment Act 17 of 1992.

 

27.       Other subsidiaries[8] of NPTH are Nampost Courier, Telecom Namibia and Powercom.

 

28.       MTC like Telecom Namibia, and the other subsidiaries of NPTH qualifies as an organ of state or government.[9]

 

29.       In Directory Advertising Cost Cutters v Minister for Posts, Telecommunications and Broadcasting, and Others[10] the court said the term ‘organ of state’ refers to

 

“institutions which are an intrinsic part of government . . . and those institutions outside the public service which are controlled by the State - ie where the majority of the members of the controlling body are appointed by the State or where the functions of that body and their exercise is prescribed by the State to such extent that it is effectively in control. In short, the test is whether the State is in control.”

 

30.       Government also yields considerable control over the affairs of MTC, through the appointment of its board and through powers exercised by the Minister responsible for public enterprises over subsidiaries of public enterprises.[11]

 

31.       In terms of section 24 of the Public Enterprises Governance Act 1 of 2019, the Minister may by regulation impose obligations in relation to any subsidiary of any public enterprise, in relation to any matter with a view to achieving the efficient governance of the subsidiary and the monitoring of its performance and the performance of the board and senior management of the subsidiary.

 

32.       The obligations that may be imposed on the board or senior management of the subsidiary include the manner of composition of the board of the subsidiary and the appointment process.  Subsection 3 provides that, a provision contained in the memorandum of association or articles of association of a subsidiary of a public enterprise which is contrary to a provision of any regulation made under subsection (1) must be construed as if it had been amended to correspond with the provisions of the regulation.

 

33.       The fact that MTC has not as yet been formally been declared a public enterprise by statute does not detract that by virtue of its State ownership it is a public entity tasked to perform a public function. 

 

34.       Baxter[12] points out that a public enterprise covers a wide spectrum of administrative forms and can include any organization selling goods or services which is wholly or partially controlled by the state or another public authority. These may not always be established under express statutory powers. A more subtle method of establishing a public enterprise is by acquiring the controlling interest of an ordinary public company. This would include the subsidiaries that statutory corporations have holding interest in, as happened in the case of MTC.[13]

 

35.       This disposes of the argument that MTC is a private commercial enterprise. MTC although incorporated as an ordinary public company is fully owned and controlled by the State. It is a public enterprise in the form and shape described by Baxter.’

 

Argument on behalf of First Respondent

[5]    Mr Phatela, who appeared on behalf of MTC, argued that the applicant’s stance was fundamentally misguided as the preconditions, for considering MTC a public enterprise, in terms of the Public Enterprises Governance Act, No.1 of 2019 had not been met, as the prescribed determination in this regard was not published in the gazette.  The applicant was thus not to be regarded a public enterprise and its decisions were thus not subject to administrative review.  He submitted further that MTC was not an executive organ of the State. MTC was a company having its origins in the Companies Act, as it was registered as such.  This was done for purposes of conducting Telecommunication services.  MTC was a private entity; it was a private initiative.  MTC was also not a successor company to any statutorily established entity.  He submitted further  : 

 

            ‘33.      The applicant’s contention is that an entity of the State – being NPTH – is a shareholder of MTC. We submit that this may very well be so but it does not render MTC to be a public entity. Subsidiaries of a state owned enterprise do not automatically become organs of state unless declared so by the Minister of Public Enterprises in a Gazette. We contend that even if the argument of the applicant was tenable, regard being had to the provisions of the Public Enterprises Act the Minister of Public Enterprises has not issued a Notice in a Gazette that MTC is a public enterprise. We submit that as a shareholder, the State has no more powers than any other sole shareholder of a company.

 

34.       We submit that bodies which fulfil public functions, depend on infrastructural support by the State and therefore function in close co-operation with structures of State authority, as is mostly evidenced by provision for State representation in their management structures, are organs of State. Examples given are universities, controlling bodies of professions, such as law societies or the South African Medical and Dental Council. These are bodies or institutions established by statute but managed and maintained mainly through private initiative.

 

35.       On the other hand we submit that private bodies or institutions not established by or by virtue of any statute but fulfilling certain of their key functions under the supervision of organs of the State are also organs of State in terms of the definition. An example is a private home for the aged which would be subject to inspections by social welfare officers.

 

36.       In our humble submission, private companies such as MTC, incorporated under the Companies Act, although established by virtue of an Act of Parliament 'can hardly be "statutory bodies" as contemplated in the Constitution, because in their day-to-day functioning they are not integrated into the State's structure of authority.

 

37.       An organ is part of the greater entity, the State, as physically an organ is part of the human body. An organ of State is not an agent of the State, it is part of government (at any of its levels).

 

38.       For this reason the Rule relied upon by the applicant cannot be correctly utilised to compel the first respondent to provide sensitive commercial dealings with private parties. 

 

39.       We contend that the control test requires supervision and control by the organ of state in order for it to pass the requirements of administrative law. We contend that control denotes the right to prescribe what the function is and how it is to be performed. It must be part of the governmental apparatus. We contend that even in extreme situation, an agent or independent contractor performing some of the State's functions on its behalf will not be a functionary of the State. As stated, the test is whether the State is in control. In the case of Directory Advertising Cost Cutters v Minister for Posts, Telecommunications and Broadcasting And Others[15] the court considered a South African entity known as ‘Telkom’ and found that it passes that test of an organ of state with flying colours. It is an executive organ of government rendering a public service under control of the executive. In s 1 the telecommunication enterprise to which Telkom succeeded is defined as 'all the assets, liabilities, rights and obligations, including any claim to copyright, trademarks and patentable inventions . . . of the State which relate to or are connected with the conduct of the telecommunications service by the department'. This would include the directories.   These assets, including the directories, are not assets to be used as Telkom may desire. They are to be used as public assets for the public benefit as part of a telecommunications service.

 

40.       We contend that MTC is not draped in similar attributes which enabled the Court in the Directory Advertising Cost Cutters v Minister for Posts, Telecommunications and Broadcasting And Others matter to be found to be an organ of state. We submit that even in the afore-cited matter, the court concluded that Telkom is in a commercial contractual relationship  and court therefore act to its commercial ends without the weight of administrative law despite the fact that the court also found that it is an organ of the state. We therefore contend that even if the Honourable Court could conclude that the first respondent is an organ of the state, the decision sought to be impugned is not reviewable.

 

41.       We therefore contend that the control test on its own is no longer a determinative factor to reach a conclusion that an entity is a state organ – administrative body.[16]

 

Argument on behalf of Adforce

 

[6]        Mrs Angula on behalf of Adforce argued as follows:

 

‘Is MTC an administrative body or organ of Government?We submit it is not.It is an economic organisation as contemplated by Article 40(f).It has no special powers created by statute beyond those ordinarily applicable to companies.It cannot enforce liability or regulate others as entities created by statute might, nor does it have any monopoly that would entitle it to act oblivious of industry norms and competition.The decision in question was further not taken by and administrative body or official but by the board of directors of public company.’

 

[7]        It was submitted further:

 

‘… that Full Service Advertising Agency agreement by MTC would not form part of the bureaucracy of the State in any sense whatsoever – even if this court were to consider MTC to be an “organ of State”.  We point out that this term is of importance in South African jurisdictions by virtue of the use of that term in the South African Constitution and with reference to the applicable legislation in South Africa being namely the Promotion of Administrative Justice Act.  Even if MTC could for a specific purpose be considered to be an organ of State, it would certainly not mean that its commercial relationships in the context of advertising services would have anything to do with the relationship between the State as a bureaucracy and citizens in any sense at all. 

Even where entities established by statute and exercising powers conferred by statute, the courts have found that the exercise of contractual powers would not be reviewable. 

We submit that MTC is run purely on a commercial basis. MTC in its pitch brief set out its commercial nature.[17] We submit that the rendering of ‘Communication, campaign and brand strategies, Creative design, Above the line creative for brand and retail advertising, Below the line creative and production management including extensive collateral for retail outlets, Digital marketing creative and development, Media planning and buying and Brand activation services would not in any proper sense at all constitute the exercise of a public power.  These activities do not arise from any statutory provision or relate to the exercise of any statutory power.  They are merely an incident of operating a telecommunication company in accordance with business principles in a commercial context.  This, we submit, is not administrative action susceptible to review – under Article 18 of the Constitution or at common law. 

The fact that the State is the sole shareholder of MTC and that it is considered a parastatal for the purpose of the State-owned Enterprise Act, does not assist the applicant.  We submit that it is not an administrative body or administrative organ and that its decision was not an exercise of public powers. …’.[18]

 

[8]        It should also be mentioned that - in a so- called supplementary note - Mr Marcus mounted a personal attack on MTC and MTC’s counsel Mr Phatella. He did so in the following terms:

 

‘1.    This supplementary note is made necessary, because of the lack of candour displayed by the Mobile Telecommunications Company (“MTC”) in the opposition to the application and continued in the written representations made to this Court.

 

2.    Litigants and their legal practitioners have a duty to act honourably to the Court by not taking positions that cannot be reconciled by the factual realties of the case.​​​​​​​

 

3.         MTC disputes that is an organ of State.  Quite extraordinary, it contends that it is a ‘normal’ company and not a state owned company.  The submission is made that, MTC is a ‘private initiative not incorporated by the State and/or ministerial initiative’.[19] It is argued that MTC is not integrated into the State structure of authority.[20]

 

4.         The lack of candour by MTC is further demonstrated by the suggestion that, the award of the tender was made in terms of the MTC’s memorandum and articles of association.  The decision in Transworld Cargo (Pty) Ltd v Air Namibia (Pty) Ltd is cited in support for this proposition.

 

5.         These submissions are made without any reference to any facts or supporting documents.  The request for documents, in line with the rules of court, is met with spurious arguments.  Most disconcertingly however, the submissions are contradicted by information given by MTC in its Integrated Report Annual Report of 2019. 

 

6.         The annual report puts it beyond doubt that MTC is an organ of state and that it accepts that fairness and transparency apply to its procurement activities.  The annual report shows that MTC:

 

6.1       was established by the Namibian Government;

 

6.2       is wholly owned by the Namibian Government;

 

6.3       provides its functions under the supervision of the Government and another organ of state (NPTH);

 

6.4       is integrated into the State’s structure of authority;

 

6.5       operates under a specific national mandate from Government;

 

6.6       accepts that requirements of fairness and transparency apply to its procurement activities.

 

7.         We address the above points with reference to the 2019 integrated annual report below.

 

MTC is a commercial organ of state with flying colours

 

8.         MTC was established in 1994 as a joint venture between the Namibian government, (through NPTH which held a 51% majority) and two Swedish entities, Telia and Swedfund.[21]

 

9.         Presently MTC is wholly owned by NPTH, which is a government entity.[22]  MTC is the largest mobile telecommunications operator in Namibia.  It enjoys a dominant position in Namibia’s telecommunications market with a 91% mobile market share.[23]

 

10.       The board of MTC is appointed by the Minister of Information, Communication and Telecommunication.[24]  The board has committed itself to applying the fundamental principles of good governance, transparency, integrity, accountability, responsibility and fairness in all its dealings.[25]  MTC acknowledges its responsibility for good governance.[26]

 

11.       The board’s performance is measured and managed against criteria set and implemented by NPTH.[27]

 

12.       MTC operates under a national mandate given to it by Government.  The mandate is to contribute to economic inclusion and growth in Namibia.[28]  MTC accepts that it is accountable to government and is under government’s control with regard to the fulfilment of its national mandate.[29]

 

13.       The ultimate controlling party in its corporate relationships with the holding company NPTH and fellow subsidiaries such as Nampost Courier, Telecom Namibia, Powercom and Nampost is the Ministry of Information, Communication and Telecommunication of the Republic of Namibia.[30]

 

14.       MTC accepts that it plays a public function in the broader Namibian society.  This function entails, meeting Namibia’s national broadband targets, connecting Namibians, eliminating the digital divide between rural and urban communities and ensuring that telecommunication is a catalyst for economic growth and inclusion.[31]

 

15.       Within its governance structure, MTC operates the MTC tender board.  Its function is to oversee procurement activities and taking reasonable steps to ensure that the tender policy and procedures are followed.  Serious transgressions are reported to the CEO. The tender board adjudicates and verifies adherence to the procurement policy and procedures.  It also ensures that tender proposals and documents are handled transparently and fairly. The commitment is to uphold MTC’s code of conduct and to be impartial and objective in reviewing proposals.[32]

 

16.       In 2019, MTC reviewed its procurement policy in line with Central Procurement Board guidelines.  This is to ensure a transparent and fair procurement process.[33]

 

Conclusion

 

17.       The refusal by MTC to produce the record is a spurious attempt to avoid scrutiny, in line with its policies and the requirements imposed by Art 18 of upholding impartial, transparent and fair procurement processes.

 

18.       MTC must be ordered to produce the record, so that the exercise of its public power is scrutinised and if found to fall short of the requirements of fairness and reasonableness be set aside.

 

19.       We ask that punitive cost order should be imposed, as a mark of this court’s disapproval of the obfuscating and dishonest conduct by MTC in refusing to produce the review record, and causing inordinate delay (close to a year) of this case.’

 

[9]        Although the Court, at the commencement of the hearing, afforded the parties, at the receiving- end of this attack, the opportunity to respond thereto, this invitation was declined. The negative aspects so raised then played no further role.

 

Is MTC to be regarded a commercial organ of State?

 

[10]      When it so comes to the determination of the question of what type of entity MTC is and whether it is to be considered an administrative body for purposes of obtaining further documents in terms of Rule 76 (6) of the Rules of Court, the following observations can immediately be made:

 

1.         MTC is indeed a public company incorporated in accordance with the applicable laws of Namibia, being the Companies Act, 28 of 2004. 

 

2.         MTC is wholly owned by NPTH, the Namibia Post and Telecommunications Holdings Limited, established under the Post and Telecommunication Companies’ Establishment Act, 19 of 1992. 

 

3.         MTC is the largest Mobile Telecommunications Operator in Namibia. Its main competitors being TN Mobile, Paratus Telecom and MTN Namibia. 

 

4.         NPTH Limited holds 100% of the issued share capital in MTC. It can thus, by virtue of its shareholding, exercise control over the activities of MTC and for this purpose determine the appointment of all directors to MTC’s board. 

 

5.         The shareholding in NPTH, in turn, is also regulated by the said statute [34] and its board is to be constituted in terms of Sections 14 and 15 of the Public Enterprise Governance Act 2006.

 

6.         It is in this manner that the Government of the Republic of Namibia, ultimately, is able to exercise control over MTC.

 

7.         It is also correct, as was submitted, that MTC has not been formally gazetted and declared to be a public enterprise.

 

[11]      At the hearing of this matter Mr Marcus then refined his written submissions in that he made it clear that he was essentially contending that MTC was actually a State owned company, as defined in the Public Enterprises Governance Acts of 2006 and 2019.  He clarified further that when he was referring to MTC as a public enterprise he was doing so in accordance with Baxter’s analysis, of a public enterprise :

 

  1. Baxter[35] points out that a public enterprise covers a wide spectrum of administrative forms and can include any organization selling goods or services which is wholly or partially controlled by the state or another public authority. These may not always be established under express statutory powers. A more subtle method of establishing a public enterprise is by acquiring the controlling interest of an ordinary public company. This would include the subsidiaries that statutory corporations have a holding interest in, as happened in the case of MTC.[36]

 

[12]      This classification is clearly in line with the Court’s observations, which have already been made above, in regard to MTC.

 

[13]      I thus find that MTC is indeed state controlled, as set out above, and that its general characterization as a public enterprise, as was submitted by Mr Marcus, was also correct as it is in line with the relied upon- and cited commentary made by the learned author Baxter.

 

[14]      In this regard it has also emerged, as was pointed out, that MTC has not formally been declared ‘a public enterprise’, as contemplated by the provisions of the Public Enterprises Governance Act of 2019, but that this fact does not impact on my finding.

 

Was MTC involved in ‘administration’?

 

[15]      According to Mr Marcus these findings however do not answer the question whether ‘ … MTC was involved in administration, when it awarded the contract in question to Adforce …’.

 

[16]      On this score he then, surprisingly,[37] submitted further that he considered the determination of the issues raised in these interlocutory proceedings as premature, as a proper determination of them and also in regard to the functions exercised could only be made once the record had fully been made available.  He emphasised the importance of the production of the record in reviews with reference to the Aonin Fishing (Pty) Ltd and Another v Minister of Fisheries and Marine Resources 1998 NR 147 (HC) and the Helen Suzman Foundation v JSC 2018 (4) SA 1 (CC) (2018 (7) BCLR 763; [2018] ZACC 8) cases. 

 

[17]      With reference to Transworld Cargo (Pty) Ltd v Air Namibia (Pty) Ltd 2014 (4) NR 932 (SC),  he submitted that that decision was appealing but that it should be distinguished as that case dealt with the award of a contract, as opposed to the award of a tender, in which administrative processes are involved and which processes have always formed the subject matter of reviews and where the fairness of the process was a central issue.  He closed off his submissions by reminding the court that the purpose of the production of the record in reviews was to ensure that all parties and the court had the full record before them on which the matter should then be decided, and also that this process should operate in favour of an applicant who would then be able to add or amend the grounds of review, originally advanced and that also in this matter the fair right of access to the courts would be ensured and with reference to which the proper analysis of the functions exercised by MTC could then be made.  He thus asked the court to compel MTC to produce the record, and grant the application with costs.

 

[18]      Mrs Angula on behalf of the second respondent again emphasised that the application was to be determined with reference to the approach to disputed facts, in motion proceedings and where the applicant could not simply make out its case in reply.  In response to Mr Marcus’s submission that the proper determination of the underlying issues could only be made, once the full record had become available, she referred the Court to the Rule 32(10) report filed of record in which Mr Marcus’s stance was reflected as follows:

 

            ‘4.        Applicant disagrees with the stance taken by the first respondent. Two grounds are mentioned here:

 

a)         The affidavit filed by applicant raises sufficient facts, which at this stage must be accepted as true and capable of proof, to bring the conduct of the first respondent, at least prima facie, within the scope of judicial review with regard to the decision maker (State entity) and function (award of public tender) performed;

 

b)         The question whether or not the award of the tender amounts to ‘a purely commercial arrangement between the first and second respondent’ can only be determined with regard to the record (and reasons) that first respondent refuses to disclose.’

 

[19]      In any event, so the argument ran further, the Court should determine the matter on the facts placed before it on the papers. 

 

[20]      Mr Phatela on behalf of the first respondent submitted with reference to the Transworld Cargo case, that the Supreme Court had found that the facts, that the Government is the sole shareholder of Air Namibia, and that it was to be regarded as a parastatal, for purposes of the State Owned Enterprises Act, were insufficient to elevate Air Namibia’s decisions, made in the ordinary course of business, for the efficient and profitable running of the company, to administrative action. 

 

[21]      Surprisingly he then also changed tack when he then took the stance, contrary to his earlier position, as adopted in his written heads of argument in which it had been submitted that the decision in question in this instance was not an administrative one - that the court could not now determine this aspect, without reference to the full review record.

 

[22]      It should also be said here that the court found it strange, and this was expressed at the hearing, that - after the parties had approached the court for directions, which the applicant then followed up with an application to compel, in accordance with what was agreed then - it was now contended that the proper determination of the central issues underlying this application could/should not be made at this stage. 

 

[23]      Be that as it may, I nevertheless believe that a determination of the liability to compel the production of the record in terms of Rule 76(6) can be made, as was submitted, on the papers, currently serving before the court.

 

The nature of the power

 

[24]      In this regard it should further be mentioned that the parties were ad idem - for purposes of determining this application - that the central question - underlying this matter – was to be answered with reference to the analysis of the nature of the powers that were involved/exercised when the contract/tender in this case was awarded. 

 

[25]      In this regard Mr Marcus then also advanced a number of factors in support of his argument that the award of the tender to Adforce was an administrative act.  These were:

 

a)         that MTC conducts telecommunication services;

 

b)         that the provisions of telecommunication services was traditionally the exclusive preserve of the State;

  

c)         that the statutory framework in this regard was changed;

 

d)         that in spite of this the State enjoys a monopoly in the field of mobile telecommunication services;

  

e)         that given the importance of such services the sector remains a heavily regulated environment;

 

f)          that the provision of telecommunication services is a public function which MTC must carry out in the public interest;

 

g)         that the very nature of the tender process calls for transparency and fairness, where the decision taken by the public authority involves the expenditure of public funds for the public interest.  The requirements of procedural fairness are particularly required here to ensure integrity, accountability, transparency, competitive supply, etc,  and that the non-compliance with these principles should entitle an aggrieved party to approach the court by way of review;

 

h)        that the tender in question was lucrative and in the range of 15 million and 35 million, such a tender award must be performed in the public interest;

  

i)          that MTC to date has paid out N$ 3 million to Adforce; this affects the public purse and such amount must be spent in the public interest;

 

j)          that Advantage Advertising was entitled to an equal opportunity to benefit from State funds;

 

k)         that MTC can coerce compliance with its rules;

 

l)          that when a State owned company enters into a contract, for its day to day operations, such decisions will ordinarily constitute administrative action;

 

m)        that it was important to consider the function performed and not the functionary and lastly;

 

n)        that if the function involved in the Transworld Cargo case, was a tender award, the Supreme Court surely would have come to a different conclusion.

 

[26]      Against this background - and at this point - I should possibly pause to mention that the parties’ legal representatives were essentially agreed as to the applicable legal position and principles applicable to the resolution of the question, on which side of the line a particular action falls and that this would depend primarily on the source of the power and the nature of the task and a series of further considerations, all of which are to be considered on a case- by-case basis.  Compare for instance Mbanderu Traditional Authority and Another v Kahuure and Others 2008 (1) NR 55 (SC) at [38], Permanent Secretary of the Ministry of Finance and Others v Ward 2009 (1) NR 314 (SC) at [30] to [35], Esterhuizen v Chief Registrar of the High Court and Supreme Court, and Others 2011 (1) NR 125 (HC) at [58] to [61] and Makando v Disciplinary Committee for Legal Practitioners and Others 2016 (4) NR 1127 (SC) at [52]

 

[27]      It is then also with these principles in mind that I also turn to the submissions made by Mrs Angula on behalf of Adforce. Here I believe that the relevant parts of her written heads of argument should not simply be summarised but should be quoted in full, where relevant, in order to demonstrate their veracity. 

 

[28]      She introduced her argument as follows :

 

‘The applicant is an advertising agency.  It proposed unsuccessfully to the first respondent (MTC) for Full Service Agency tender in terms of MTC Tender no 25/18/0 (advertising tender). The second respondent was the successful proposer.

MTC is a public company. It is not incorporated by statute.  In operating a telecommunication service, it does not exercise any statutory function. 

As part of its business in operating telecommunication service, it advertises its services to the public, just like any other privately-owned telecommunication business.  This part of its business, like other telecommunication company, is conducted upon business principles within the industry.  In selling cellular and data services, it is common place within the industry that cellular and date services is widely advertised and well known to consumer, so as to ensure that they maximise their revenue from that aspect of their business operations.  The revenue earned by advertising its services and products, like other aspects of business, is a product of supply and demand.  There are other operators within the telecommunication industry competing with MTC for cellular and data services. TN Mobile, MTN Namibia and Paratus Telecom operate as competitors of MTC.[38]  The rendering of telecommunication services and the sale of such products is a function of competition and supply and demand. A tender for advertising services is therefore purely a commercial engagement by MTC with respective advertisement agency.

The successful agency will be responsible for the following rendering the following services to MTC:

Communication, campaign and brand strategies, Creative design, Above the line creative for brand and retail advertising, Below the line creative and production management including extensive collateral for retail outlets, Digital marketing creative and development, Media planning and buying and Brand activation.[39]

 

[29]      She then submitted further that the context of the decision making was material:

 

‘ … in order to assess whether the nature of the decision itself constitutes administrative action for the purpose of a review.  We submit that in running its telecommunication business, it is open to MTC to employ the most effective means to market, advertise and sell its products.   In doing so, it would be open to it to negotiate and enter into commercial agreements (via tender process) with advertising agency for services numerated above.  The agency is required to ensure that the solution offered by it to MTC will form a complete, cost effective and functional proposal.[40]

 

We submit that MTC is run purely on a commercial basis. MTC in its pitch brief set out its commercial nature[41]. We submit that the rendering of ‘Communication, campaign and brand strategies, Creative design, Above the line creative for brand and retail advertising, Below the line creative and production management including extensive collateral for retail outlets, Digital marketing creative and development, Media planning and buying and Brand activation services would not in any proper sense at all constitute the exercise of a public power.  These activities do not arise from any statutory provision or relate to the exercise of any statutory power.  They are merely an incident of operating a telecommunication company in accordance with business principles in a commercial context.  This, we submit, is not administrative action susceptible to review – under Article 18 of the Constitution or at common law. 

The fact that the State is the sole shareholder of MTC and that it is considered a parastatal for the purpose of the State-owned Enterprise Act, does not assist the applicant.  We submit that it is not an administrative body or administrative organ and that its decision was not an exercise of public powers. 

We submit that the activities in question are essentially commercial business activities as part and parcel of operating a telecommunication company in accordance with business principles.  The power thus exercised in calling and adjudicating upon advertising services is a contractual power – as opposed to a public power – which arises from the commercial activities engaged by MTC.  The review of the decision does not emerge from its starting blocks for this very reason. 

Another consideration in respect of the nature of the decision made by MTC is evident from the contractual terms of the Full Services Advertising Agency Proposal. The agreement is subject to confidentiality, intellectual property rights and copyrights. The agency is required to demonstrates is creative strategies, innovation, intellectual proprietary and prices[42].

 

[30]      She then referred the Court to the relevant extracts from the South African Rugby Football Union and Others, President of the Republic of South Africa and Others v 2000 (1) SA 1 (CC)[43] and Chirwa v Transnet Ltd and Others 2008 (4) SA 367 (CC)[44] decisions, on the strength of which it was argued :

 

‘ … that (the) Full Service Advertising Agency agreement by MTC would not form part of the bureaucracy of the State in any sense whatsoever – even if this court were to consider MTC to be an “organ of State”.  We point out that this term is of importance in South African jurisdictions by virtue of the use of that term in the South African Constitution and with reference to the applicable legislation in South Africa being namely the Promotion of Administrative Justice Act.  Even if MTC could for a specific purpose be considered to be an organ of State, it would certainly not mean that its commercial relationships in the context of advertising services would have anything to do with the relationship between the State as a bureaucracy and citizens in any sense at all. 

Even where entities established by statute and exercising powers conferred by statute, the courts have found that the exercise of contractual powers would not be reviewable.’ 

 

[31]      After quoting from Cape Metropolitan Council v Metro Inspection Services (WC) CC 2001 (3) SA 1013 (SCA) (2001 (10) BCLR 1026; [2001] ZASCA 56) [45], Adforce’s position was then summed up :

 

‘ …  with respect to the various considerations set out by the courts to determine whether an act constitutes administrative action (Adforce’s position) is as follows: 

·          Is MTC an administrative body or organ of Government?  We submit it is not.  It is an economic organisation as contemplated by Article 40(f).  It has no special powers created by statute beyond those ordinarily applicable to companies.  It cannot enforce liability or regulate others as entities created by statute might, nor does it have any monopoly that would entitle it to act oblivious of industry norms and competition.  The decision in question was further not taken by and administrative body or official but by the board of directors of public company. 

 

·          Is the source of the power exercised by MTC statutory or contractual?  We submit it clearly is not statutory.  It is to be found in its Memorandum of Association and Articles of Association as in the case of any company. 

 

·          What was the nature and purpose of the contract?  The facts demonstrate the decision was one taken by MTC to increase the revenue, compete with the telecommunication industry and give it a competitive edge.  It is one based on ordinary business principles following “negotiation to agree and finalise price, scope of work, scope of services and other salient commercial terms with the preferred agency[46].”  It followed the industry practice of entering into a negotiated advertising agreement.  MTC does not have a monopoly in any proper sense which could have allowed it to abuse its position by dictating terms of any agreement.  There existed no inequality of bargaining power as aptly demonstrated by the terms pof the tender proposal.  We therefore submit that the result of the enquiry into the nature and purpose of the decision and subsequent agreement does not assist the applicant.

 

·          Was MTC required to act in the public interest and was it fulfilling a public function?  While it is undeniable that MTC is partially funded by the public, this in itself does not mean that it must conduct its business in the public interest or subject, always, to judicial review.  That would defeat the very purpose of setting up a public company to act within the ultra-competitive telecommunication industry, albeit that the ability of the company to act completely unfettered was reduced by the State-Owned Enterprises Governance Act. We submit the inclusion of MTC within the purview of the Act means no more that MTC’s directors remain duty bound to ensure MTC conducts business within its interests only subject to it remaining within its budgetary and other parameters as determined by its shareholder.  When one considers the subject matter of the decision – full advertisement services– which is not a direct governmental project, not an interest the Government has to promote, and which does not amount to the implementation of legislation, it is evident that MTC was required to act within the interests of the company and no more.  The argument that the function of procuring advertising services is a public function renders the actions taken by the beneficiary reviewable, ignores commercial reality.  It is for instance common knowledge that the State subsidies various industries, such as the local poultry and previously the dairy industries.  The act of subsidising those industries did not render decisions taken by the participants in those industries reviewable. 

 

[32]      It was then in conclusion submitted that the approach followed in Ward[47] would also find application in this case and reliance was ultimately placed on Transworld Cargo (Pty) Ltd v Air Namibia (Pty) Ltd and Others 2014 (4) NR 932 (SC)[48], with reference to which the Court was urged to conclude that MTC’s decision does not constitute administrative action and the information contained in the record was privileged due to its confidential and proprietary nature and that it thus followed that the application should be dismissed and that costs should be awarded to the respondents in respect of their opposition to this interlocutory application, which essentially disposes of the main application as well. 

 

Resolution

 

[33]      At the outset I should say that the arguments raised on behalf of the second respondent are forcefully made, and that I am inclined to embrace them generally. 

 

[34]      But I would also do so for the following further reasons and on account of the following further factors:

 

1.         When MTC, a public company, not established in terms of any specific enabling legislation, but in terms of the applicable Companies Act, renders its mobile telecommunication services, it does not exercise any prescribed statutory function.  Because of this it is more than likely that, ultimately, the decision to award the tender in question, to Adforce, was a decision that was taken by MTC’s Board of Directors.[49] 

   

2.         In such circumstances it must also be inferred that the source of the powers, exercised by MTC’s board, in this instance, are to be found more than likely in MTC’s memorandum and articles of association.

 

3.         As part of its business operations, MTC advertises its services to the public. This, for instance, becomes apparent from the tender documentation already filed of record. 

 

4.         These business operations are most probably conducted in line with prevailing business principles within the industry. For example, MTC is run on a purely commercial basis.  This becomes apparent also from the so called ‘pitch brief’, dated 9 August 2018.

 

5.         For purposes of- and in order to enhance its cellular- and data services - such services are advertised and marketed. Again this can be inferred from the tender documentation.

 

6.         I accept that all this is done to maximise revenue - that is the only reasonable inference to be drawn from the facts and circumstances presently before the Court in my view.

 

7.         All this is done by MTC in order to be able to compete effectively with its competitors, TN mobile, MTN Namibia and Paratus Telecom. Here it becomes clear at the same time that MTC operates in a competitive environment, although MTC seems to have a dominant market share. 

 

8.         This is underscored further by the listed tasks for which the successful tenderer would become responsible.  These are expressly listed in the available tender documentation.

 

[35]      From these factors alone it must be inferred - and I uphold the argument advanced on behalf of Adforce in this regard - that the tender for advertising services was purely a commercial engagement of MTC, with Adforce, an advertising agency, engaged precisely for this purpose. 

 

[36]      It also does not take much to be persuaded by the argument, that also in this instance the context of the decision making is critical to the determination of the question whether or not the nature of the decision constitutes administrative action for purposes of a review or not.  In this regard the submission seems to be correct that, in running its telecommunication business, it is open for MTC to employ the most effective means to market, advertise, and sell its products.  In doing so it would be open to MTC, to negotiate and enter into commercial agreements, (also via a tender process), with any advertising agency. 

 

[37]      Mrs Angula also has a point when she submits that MTC is purely run on a commercial basis.  MTC, in its pitch brief, sets out its commercial nature and that thus”

 

‘ … the rendering of communication campaign and brand strategies, creative design, above the line, creative for brand and retail advertising, below the line, creative and production management, including extensive collateral for retail outlets, digital marketing creative and development, media planning and buying and brand activation services would not in any proper sense at all constitute the exercise of a public power … in circumstances where it is clear that the sought activities do not arise from any statutory provision or relate to the exercise of any statutory power… ‘. 

 

[38]      I further uphold the argument, that the tender process utilised for purposes of obtaining the marketing services of an advertising agency is “an incident of operating a telecommunication’s company in accordance with sound business principles in a competitive environment”, and that all this must be seen in a commercial context. 

 

[39]      Surely it must be inferred from all the circumstances pertaining to this case that the power exercised in the calling for tenders and making a decision thereon for purposes of who would render the required advertising and marketing services for MTC, is a contractual power - as opposed to a public power - which arises from the business activities conducted by MTC.

 

[40]      Mr Marcus has raised the point that the fact that a tender process was resorted to, and because it is normally such a process that becomes liable to review, this would be indicative of the fact that Advantage’s quest for the record rests on firm ground.  At the same time Mr Marcus was however alive to the fact that, at the end of the tender process, would lie the conclusion of a contract between MTC and the successful tenderer.

 

[41]      It is further common cause in this regard that the ‘Full Services, Advertising Agency Proposal’ also contains conditions relating to confidentiality, intellectual property rights and copyright rights.  These aspects are then also indicative of the fact that the terms of the ‘Full Services Advertising Agency’ agreement would not form part of the ‘bureaucracy of the State’, as it was put, or would be related, in any way, to ‘the relationship between the State and its citizens’ at all.  Does, in such circumstances, the process, i.e. the tender process, that would eventually lead to the conclusion of a contract, be decisive, as was submitted by Mr Marcus?  I believe not. 

 

[42]      Strong reliance was placed by Mr Marcus further on the fact that the provision of mobile telecommunication services is a public function that should be carried out by MTC in the public interest.  These submissions, I believe, have their foundation in the fact that MTC is government controlled and if regard is had to the manner in which Government exercises control, for purposes of achieving its objectives, through its 100% shareholding held in MTC through NPTH, established in terms of the Post and Telecommunications Companies Establishment Act of 1992, and the manner in which the Government, in turn, controls the holding company as regulated also by the said Act. 

 

[43]      Also this argument cannot be conclusive. Whilst it seems to be correct that Government, through its controlling shareholding, and the resultant power to determine the composition of the MTC board of directors - and thereby to eventually be able to determine that MTC rolls out its mobile telecommunication services throughout Namibia in line with the national interest - the subject matter of the decision - to award the advertising tender to Adforce - demonstrates that this was not an interest that Government had to promote or determine via its control over MTC.  Here MTC’s board was clearly required to act only in the interests of the company when it awarded the tender and no more.  This would also accord- and be in line with the commercial reality pertaining to the matter. 

 

[44]      In such circumstances it becomes clear also that the further factors advanced on behalf of Advantage Y&R, do not materially impact on the ultimate conclusion to be arrived at in this matter, namely that the decision complained of, to award the tender in question to a competitor of the applicant, does not constitute administrative action. 

 

[45]      I can do no better - in conclusion - but to paraphrase - and thus borrow from what the learned Judges of Appeal have said in Transworld Cargo (Pty) Ltd v Air Namibia (Pty) Ltd and Others, at paragraphs [38] to [41] of that judgment.[50] I do so as follows:

 

1.         MTC is a State owned public enterprise. It is also a public company and operates as such.  The day to day decisions - inclusive also of the decision to engage the services of an advertising agency - and to thus enter into contracts necessary for the efficient marketing and advertising of its products and services - are taken by its directors in terms of its Memorandum and Articles of Association. The decision taken in this instance was such a decision.

  

2.         The fact that the Government, indirectly, through its shareholding, controls MTC ultimately is insufficient to elevate MTC’s decisions - made in the ordinary course of business, for the efficient running of a profitable company - to administrative action.

 

3.         In the present case, MTC’s decision, to enter into an agreement with Adforce, via a tender process, was taken with a view of marketing and advertising MTC’s services and products and thereby to increase its profitability.  The functions and powers so exercised did not arise from any statutory provision, nor did they relate to any statutory power.  The powers exercised were not public powers but contractual powers which arose from MTC’s commercial activities, conducted in a commercial, competitive environment.

 

4.         The decision taken by MTC to enter into an agreement with Adforce is thus not susceptible to review in terms of Article 18 of the Constitution of Namibia or the applicable common law.

 

[46]      It is for these reasons that:

 

1.         The application to compel, dated 1 August 2019, is hereby dismissed with costs, such costs, where applicable, shall include the costs of one instructed- and one instructing Counsel. 

 

2.         The case is postponed to 1 July 2020 at 08h30 for a status hearing. 

 

 

----------------------------

H GEIER

Judge

 

APPEARANCES

 

APPLICANT:                                   N Marcus

                                                        Nixon Marcus Public Law Office,

                                                        Windhoek

 

1st RESPONDENT:                         T.C Phatela

                                                        Instructed by Palyeenime Inc.,

            Windhoek

 

2nd RESPONDENT:                        E.M Angula

                                                        AngulaCo. Inc.,

            Windhoek

 

 

 


[1] Page 8 of record, Para 19 of the founding affidavit of review application.

[2] Page 8 of record, Para 20 of the founding affidavit of review application.

[3] Page 9 of record, Para 26  of the founding affidavit of review application.

[4] Pages 9-10 of record, Para 27 - 29 of the founding affidavit of review application.

[5] Page 13 of record, Para 44 of the founding affidavit of review application.

[6] As summarised by Mr Marcus on behalf of the applicant.

[7] Public Enterprises Governance Act 1 of 2019 defines it as ‘a company in which the State is the sole or majority shareholder…’.

[8] Section 1(3) Companies Act 28 of 2004.

[9] Mweb Namibia (Pty) Ltd v Telecom Namibia Ltd and Others 2011 (2) NR 670 (SC) para 19.

[10] 1996 (3) SA 800 (T).

[11] Page 146 of record, Para 9 of the replying affidavit to affidavit of MTC.

[12] Baxter, L., 1994. Administrative Law. 1st ed. Juta. p162.

[13] Ibid: pp163-165.

[14] See Mr Phatela’s heads of argument on behalf of the first respondent.

[15] 1996 (3) SA 800 at 811 – 812.

[16]South African Association of Retired Persons v Transnet Limited [1994] 4 All SA 25 (W).

[17] Pitch brief dated 9 August 2018 to founding affidavit.

[18] See paragraphs 14, 15, 22 and 23 of the second respondent’s heads of argument.

[19] MTC heads of argument para 32.

[20] MTC heads para 36.

[21] Annual report page 4.

[22] Annual report page 2.

[23] Annual report page 4.

[24] Annual report page 10.

[25] Annual report page 9.

[26] Annual report page 12.

[27] Annual report page 16.

[28] Annual report page 12.

[29] Annual report page 23.

[30] Annual report page 112.

[31] Annual report page 23.

[32] Annual report page 21.

[33] Annual report page 21.

[34] see Section 2(10)(b)(ii).

[35] Baxter, L., 1994. Administrative Law. 1st ed. Juta. p162.

[36] Ibid: pp163-165.

[37] Here it should be kept in mind that the parties had agreed that this determination should be made in limine for purposes of determining the liability to produce the record in terms of Rule 76(6).

[38] Tender document p 2 of 26, para 1.

[39] Tender document p 2 of 26, para 1.1 founding affidavit.

[40]Tender document p 9 of 26, para 18 to founding affidavit.

[41] Pitch brief dated 9 August 2018 to founding affidavit.

[42] Page 1-22 of the proposed agreement- Main Founding affidavit.

[43] [141] to [143].

[44] [138] to [142].

[45] [16] to [17].

[46] Page 9 of 26, para 17 of the agreement attached to the founding affidavit.

[47] Ibid at [59].

[48] Para’s [21] and [24] and [38] to [41].

[49] In this regard it should be borne in mind that the relevant memorandum and articles of association had not been placed before the Court.

[50] Compare: ‘[38] In my view, the court a quo correctly found that the decision complained of did not constitute administrative action. Air Namibia is a state-owned enterprise. It is a private company and operates as such. The day to day decisions (for example the purchase of light bulbs or stationery or entering into contracts) necessary for the efficient running of the company are taken by its directors acting in terms of its memorandum and articles of association which is the source of their power. The decision, in casu, was such a decision.

[39] The fact that the government is its sole shareholder and that it is regarded as a parastatal for purposes of the State-Owned Enterprises Act, is insufficient to elevate its decisions, made in the ordinary course of business for the efficient and profitable running of the company, to administrative action.

[40] In the present case, the decision to enter into the agreement with Binvis was taken with a view to moving the company from a loss-making position to one of profitability. It did not, as the court a quo correctly found, arise from any statutory provision nor did it relate to the exercise of any statutory power. I agree with the court a quo that the power exercised in entering into the challenged agreement is not a public power but a contractual power which arises from the commercial activity by Air Namibia to increase its revenue.

[41] I conclude, therefore, that the decision taken by Air Namibia to enter into the agreement with Binvis is not susceptible to review in terms of art 18 of the Constitution of Namibia or the common law. In view of this conclusion, it becomes unnecessary to determine the secondary issue raised by Mr Frank regarding the expiry of the agreement.