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Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa (1030/2017) [2018] ZASCA 167

6th December 2018

Click here to read the full judgment on Saflii

[1] The Passenger Rail Agency of South Africa (PRASA), the respondent, until 2014, was effectively controlled by Mr Lucky Montana, the Group Chief Executive Officer of PRASA. He and some of his officials approved the award of a tender for the supply of various train locomotives to a recently incorporated company, Swifambo Rail Leasing (Pty) Ltd (Swifambo), the appellant. The award was vitiated by a number of material irregularities, primarily the dishonest and corrupt conduct of officials of PRASA in advertising the Request for Proposals in respect of the supply of locomotives and in awarding the contract. Swifambo has neither challenged nor contradicted PRASA’s evidence that the tender was procured through corruption. But it insisted that it was an innocent tenderer, and that the contract between it and PRASA ought nonetheless to remain in existence and that the parties should be permitted to continue performing their respective obligations.

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[2] On discovering the fraudulent conduct of Mr Montana and others, a newly reconstituted board of control of PRASA applied to the Gauteng Local Division of the High Court to have the contract declared invalid and for an order setting it aside. I shall refer to that court as the high court for the sake of convenience. Francis J granted the orders sought. The appeal before us is with his leave. The chief defences raised by Swifambo in the high court were that PRASA brought the application some three years after the contract was concluded and was thus precluded from seeking relief because of its unreasonable delay; that Swifambo was an innocent tenderer, which had no knowledge of PRASA’s dishonesty; and that it was not equitable to set aside the contract in the circumstances. Francis J rejected all these defences. On appeal, Swifambo persists in them. In the high court, PRASA also sought an order setting aside an arbitration agreement in the contract. That order was not contested in the high court and it is not an issue in this appeal.  

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