The Road Traffic Management Corporation (RTMC) has lost a Constitutional Court challenge in a case in which it argued that it was within its rights to renege on a R33m tender agreement. A Cape Times report says the RTMC had in 2009 entered into a service level agreement with Waymark Infotech (Pty) Ltd to develop and install an Enterprise Resource Planning system.

In what the Constitutional Court called a ‘bizarre twist’, in 2010, the RTMC told Waymark that its executive committee had resolved to suspend the agreement ‘for about a week’. The RTMC further said it would inform Waymark once the suspension had been lifted.

In July 2010, Waymark instituted action proceedings against the RTMC in the Gauteng High Court (Pretoria), alleging that ‘the suspension of services and deliverables for which the parties’ agreement provided amounted to an unlawful termination or, alternatively, repudiation of the agreement,’ read the Constitutional Court judgment written by Acting Judge Xola Petse.

The RTMC did not approach the Minister of Finance for approval, but it had argued it was not bound by the agreement because section 68 of the Public Finance Management Act decreed the agreement was void as it was not approved by the Minister.

Waymark set out to claim damages of R6.7m from RTMC for breaching the agreement. The High Court found in favour of the RTMC, but Waymark won an appeal at the SCA.

The Constitutional Court has now rejected the appeal by the RTMC. It held that the agreement would only have needed the authorisation of the Minister of Finance if it was an agreement to borrow money, issue a guarantee, indemnity or security, or if the agreement was any other transaction that bound or may bind a public institution to any future financial commitment.

Full Cape Times report (subscription needed)

Road Traffic Management Corporation v Waymark (Pty) Ltd