Commercial Law Index

South African Airways (SAA) received government funding on four occasions (since 2007). The applicant contended that SAA’s operation was non-commercial, anti-competitive and prejudicial to other air transport services. The decisions to issue a R5.6 billion guarantee to SAA on 26 September 2012, and to extend the guarantee’s period, were the subject of the review. Applicant argued that the decision was unlawful and ultra vires of the Public Finance Management Act; violated the separation of powers; violated sections 7(2), 9, and 22 of the Constitution; irrational; procedurally unfair; and in violation of Comair’s legitimate expectations.

The court held that pronouncing on the legality of the first decision was moot as there would be no utility in the order or in pronouncing on the issues related to it. It was separate from the extended guarantee. Furthermore, the court found that it did not have jurisdiction to decide issues based on Competition Law. The court also held that it was not in its jurisdiction to decide on matters of policy, to which the decision to issue the guarantee amounted.

Due to the dynamic nature of the market, need for flexibility, and to intervene in the dire circumstances of SAA as a strategic asset, the court held that there was no basis for forming a legitimate expectation by the applicant. The court also held that the decision was rational as it considered all relevant factors and involved multi-level input from different governmental departments.

The application was dismissed with no order as to costs.

The plaintiff supplier sued the defendant – its Local Technical Representative (LTR) in accordance with the National Drug Authority Act for the distribution of pharmaceutical products – for breach of contract. The defendant failed to pay the plaintiff for the assorted products it supplied. The plaintiff consequently claimed for loss of income, damages, interest and costs of suit. The defendant lodged a counter-claim alleging that the plaintiff/first counter-defendant had breached the memorandum of understanding concluded between the parties and had, through various means, attempted to cripple the defendant’s/counter-claimant’s enterprise. It alleged further, as the basis of its challenge to the legality of the arrangement between the first and second counter-defendants, that the just-mentioned parties had colluded in this endeavour so as allow the latter to become the new LTR. 

The defendants/counter-claimants successfully raised the procedural bar of res judicata – which prohibits judicially-decided matters from being heard afresh a second time – concerning the plaintiff’s claim, given that the matter of their indebtedness thereto had been resolved in the settlement of antecedent winding-up proceedings. To what extent ought the defendant’s/counter-claimant’s challenge have been raised as part of the previous lawsuit? Suggesting that res judicata was applicable to both parties’ claims, the court nevertheless considered the counter-claimant’s’ case in respect of the first and second counter-defendants and found no measure of illegality or bad faith on the evidence. The counter-claimant was additionally time-barred from seeking review of the National Drug Authority’s decision over the LTR change. 

The plaintiff’s suit and defendants’ counter-claims were accordingly dismissed with costs.