THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Not Reportable
Case No: 134/2014

In the matter between:

AFRICAN INFORMATION TECHNOLOGY
BRIDGE 1 (PTY) LTD
APPELLANT

and

THE MEMBER OF THE EXECUTIVE
COUNCIL FOR INFRASTRUCTURE
DEVELOPMENT (formerly part of PUBLIC
TRANSPORT, ROADS AND WORKS)
GAUTENG PROVINCE
RESPONDENT

Neutral citation:  African Information Technology Bridge 1 v The MEC for
Infrastructure
Development
Gauteng
Province
(134/2014) [2015] ZASCA 104 (2 July 2015)

Coram:
Maya and Bosielo JJA and Schoeman, Fourie and Mayat
AJJA

Heard:
5 May 2015

Delivered:
2 July 2015

Summary: Tender procedure - contracts vitiated by fundamental justus
error and therefore invalid and unforceable - appeal dismissed

_____________________________________________________________________

ORDER

On appeal from: North Gauteng High Court, Pretoria (Makgoka J sitting
as court of first instance).
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________

JUDGMENT

Schoeman AJA (Maya and Bosielo JJA and Fourie and Mayat AJJA
concurring)

[1] The issue in this appeal is whether the Member of the Executive
Council for Infrastructure Development, Gauteng Province, (the MEC)
entered into contracts with the appellant, a company named African
Information Technology Bridge 1 (Pty) Ltd (AITB 1), and if so, whether
AITB 1 rendered services to the MEC and suffered damages relating to
three tenders. These were tender GC 1417/05/2006 (tender 1417), GC
1418/05/2006 (tender 1418) and GC 1419/05/2006 (tender 1419), for six
projects. The court below granted judgment in a diminished amount in
favour of AITB 1 in respect of one of its five claims against the MEC, but
dismissed the further claims. AITB 1 appeals with leave of the court
below.

[2] Five witnesses testified during the trial, but the documentary
evidence spoke louder and clearer than any of the witnesses.

The parties and the background.
[3] AITB 1 is a company that was formerly known as Crestwell
Trading 9 (Pty) Ltd (Crestwell). By a special resolution of the company,
dated 8 June 2006, the name of Crestwell was changed to African
Information Technology Bridge 1 (Pty) Ltd (AITB 1). Furthermore, the
main business and main object of Crestwell was changed from ‘General
trading in all aspects’ to ‘Information technology’. These changes were
registered with the Registrar of Companies on 9 June 2006. The sole
director of AITB 1 was Mr N H Tucker.

[4] Another main role player is African Information Technology
Bridge (Pty) Ltd. The acronym this company used in all its dealings
relevant to this matter was AITB, but to prevent confusion I will refer to
it as African Bridge.  The latter company had three directors, Mr N H
Tucker, his wife Mrs G Tucker and Ms N Rose-Dukhie.

[5] The Gauteng Department of Transport and Public Works (the
department) was involved in the development of Construction Contact
Centres and for that purpose a pilot project was initiated in January 2006.

[6] African Bridge was invited to complete a pilot project for the
department in conjunction with another company, iNathi Technology
Holdings (Pty) Ltd (iNathi).  The role of African Bridge was to provide
services and ‘soft-skills’ while iNathi was responsible for turnkey
presentations and infrastructure.

[7] This pilot project was successfully completed. It was a precursor to
the six projects that formed the subject matter of the three tenders referred

to earlier, tenders 1417, 1418 and 1419.  In May 2006 the department
invited the three tenders.

[8] Ms Rose-Dukhie was the sister of one of the senior managers in the
department, Ms Rose-Frazer, who was to be part of the project
management and the responsible person for the roll-out of the project.
This connection would have disqualified African Bridge from the tender
process. Negotiations between the directors of African Bridge to buy out
Ms Rose-Dukhie’s shares in African Bridge were unsuccessful as they
could not agree on a price for Ms Rose-Dukhie’s shares.

[9] To overcome this dilemma, Mr Tucker changed the name of
Crestwell to AITB 1. The similarities in the names of AITB 1 and African
Bridge are striking, and, as will become apparent quite clearly deliberate.
AITB 1 signed the bid documents on 10 June 2006, the day after the
name change from Crestwell to AITB 1 was registered.

[10]  On 28 June 2006 a meeting of the Departmental Acquisition
Council (the DAC) of the department was held. This body was inter alia
vested with the authority to adjudicate on the tenders submitted in the
instant matters. The minutes of the meeting recorded that tender 1417 be
awarded to ‘AITB Inathi JV’ with certain conditions pertaining to a
reduction of the tender price, which was subsequently effected. The DAC
decided to award the tender in respect of 1418 to ‘AITB and Inathi JV’ as
it ‘was the second highest tender to specification and on points claimed
basis.’ In respect of tender 1419 it was decided that the appointment of
‘AITB/ Inathi JV’ would be conditional on the conclusion of a detailed
joint venture agreement between African Bridge, iNathi and Royal Yard
Holdings.’ The latter was a wholly female owned company.

[11] It is common cause that the acronym AITB was used for African
Bridge in dealings between the department and African Bridge. The
abbreviation on the letterheads of African Bridge refers to AITB and
African Bridge referred to itself as AITB.

[12] After the meeting of the DAC, on 28 June 2006, letters of
acceptance for tenders 1417 and 1418 were written and signed by Mr
Maabane on behalf of the Director: Procurement and BEE. These letters
were addressed to African Bridge (AITB) and iNathi. In respect of tender
1417 the conditional acceptance as provided for in the decision of the
DAC was set out.

[13] On 5 July 2006, an employee of AITB 1, Mr Zikalala, on the
instruction of Mr Tucker, went to the department and requested that the
letters of appointment be changed to reflect that the tender of AITB 1 had
been accepted. Ms Mokgoro, an employee of the department, signed the
letters in the absence of the Director: Procurement and BEE and Mr
Maabane. It is common cause that the DAC did not meet to discuss the
amended letters of award.

[14] On 6 July 2006 Ms Rose-Frazer had a meeting with Mr Tucker and
Mr Keshwar, the sole director of iNathi.  At this meeting Ms Rose-Frazer
presented documents wherein the respective responsibilities of iNathi and
African Bridge were set out with regard to tenders 1417 and 1418. Mr
Tucker was dissatisfied as he believed that the monetary values allocated
to the respective responsibilities favoured iNathi.  These letters by the
department, in respect of tenders 1417 and 1418, were addressed to
African Bridge and not AITB 1. Furthermore, both documents made

provision for Mr Tucker to sign on behalf of African Bridge, which he
did in respect of tender 1418, although he did not sign at the designated
space in respect of 1417.  However, he did sign an addendum in respect
of each of these documents wherein Mr Tucker and Mr Keshwar ‘on
behalf of their respective companies agreed to . . . amendments to their
teaming agreements’.  These addenda recorded  arrangements between
Mr Keshwar’s company and Mr Tucker’s company inter se. Mr Tucker
did not alert the department or anybody else that the agreement was not
between African Bridge and the department, but that the department was
contracting with AITB 1.  The contracts referred only to African Bridge
and not to AITB 1. I will refer to these agreements as ‘the 6 July
agreements’.

[15] On 7 July 2006 a meeting was held between the parties in respect
of tender 1419 to carry into effect the condition imposed by the DAC, for
acceptance of the tender, on condition that a tripartite joint venture
agreement had to be concluded between African Bridge, iNathi and Royal
Yard Holdings. Mr Tucker refused to sign the agreement as there was a
further requirement that Royal Yard Holdings would also be a party to
tenders 1417 and 1418. However, iNathi and Royal Yard Holdings signed
the contract with the department in respect of tender 1419.

[16] Later, after difficulties arose between the parties relating to the
execution of the tenders, the department became aware that it had not
contracted with African Bridge, but with AITB 1. Despite this, the
department continued to negotiate with AITB 1, knowing it was AITB 1
and not African Bridge, in an attempt to complete the tender. This,
however, came to nought.

[17] It is common cause that AITB 1 performed work in respect of
tender 1417 and the department paid an amount of R220 000 to AITB 1.
Furthermore, the court below granted judgment in favour of AITB 1 for
the amount of R617 894,40 in respect of the first claim, relating to tender
1417,  with ancillary relief relating to interest and costs.

Did the department contract with AITB 1?
[18] It is the case of AITB 1 that valid contracts were concluded with
the department upon the award of the tenders to AITB 1 in respect
thereof. The court below found that the 6 July agreements constituted the
contracts between AITB 1 and the department in respect of tenders 1417
and 1418.  I will first deal with the award of the tenders. The defence
raised by the department was that no contracts were entered into. In this
context the defence was in fact that there was a unilateral mistake on the
part of the department.

The award of the tenders, the subsequent contracts and the unilateral
mistake
[19] In respect of tender 1419, the conditions imposed by the DAC were
not complied with, and Mr Tucker did not sign any contract with the
department as he admittedly refused to do so when requested. It is not
clear on what basis AITB 1’s claim is founded in respect of tender 1419
as the evidence clearly established that no contract was ever concluded
between AITB 1 and the department. It is therefore not necessary to
further deal with tender 1419.

[20]  In respect of tenders 1417 and 1418 the department pleaded that it
intended to contract with African Bridge and not AITB 1 and therefore no
contracts were entered into in respect of those tenders.

[21] One of the primary requirements of any contract is that there must
be a meeting of the minds regarding the essentials of the contract that the
parties intend concluding. As a result:
‘Mistake, whether caused by misrepresentation or not. . . is generally regarded as a
defect of the will, thus vitiating the consent or assent of the parties . . . .[F]for the
formation of a valid agreement the concurrence of the will of the parties is necessary
and essential, and. . .the will can be vitiated by defects as e.g. mistake,
misrepresentation, fraud and duress.’1

[22] For the purposes of this appeal, the only defence that we are
concerned with, which was raised by the department in denying the
validity of the contracts between the parties (with reference to tenders
1417 and 1418), amounts to a unilateral error in persona by the
department. It is a unilateral mistake because it is only the department
that mistakenly thought that it had contracted with African Bridge, as Mr
Tucker knew that the tender documents were completed in the name of
AITB 1. Such a defence, which avoids the contract, has been said to be
difficult to establish. In National and Overseas Distributors Corporation
(Pty) Ltd v Potato Board,2 the following was said:
'Our law allows a party to set up his own mistake in certain circumstances in order to
escape liability under a contract into which he has entered. But where the other party
has not made any misrepresentation and has not appreciated at the time of acceptance
that his offer was being accepted under a misapprehension, the scope for a defence of
unilateral mistake is very narrow, if it exists at all. At least the mistake (error) would
have to be reasonable (justus) and it would have to be pleaded. In the present case the
plea makes no mention of mistake and there is no basis in the evidence for a
contention that the mistake was reasonable.'

1 L C Hofmann ‘The basis of the effect of mistake on contractual obligations’ (1935) 52 SALJ 532.
2 National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A) at
479F-H.

[23]  However, if a mistake is a fundamental mistake, and a justus error,
in other words a reasonable mistake,3 it has the result that the contract is
void ab initio.4 In Bird v Sumerville5 this court held that where a seller
addressed an offer to sell a block of flats to a specific person (the buyer),
a valid contract was not concluded when the offer was accepted by the
buyer and a person of whom the seller was not aware. Kok v Osborne6
was a matter where the seller accepted an offer ostensibly made by two
buyers jointly. However, the offer was actually from only one buyer.  It
was clear that the defendant in that instance would not have accepted the
offer had he known the true position.  There Jones J said:
‘. . . [H]e is not bound by his apparent acceptance of it if he was genuinely mistaken,
even though his mistake is unilateral, provided that he acted reasonably in the
circumstances and his mistake was justus.’7

[24] In Beyers v Mckenzie,8 de Villiers CJ referred with approval to a
decision of the House of Lords and said the following:
‘ . . . [I]t was held that if B, a person of no credit, gets goods from A by trading under
a name and address closely resembling those of C, who is known to A as a respectable
trader, . . . [because] A believed he was dealing with C, there was no contract with
B. . . .’
[25] In Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis,9 it was held,
in a case of unilateral mistake, that:
‘. . . the decisive question in a case like the present is this: did the party whose actual
intention did not conform to the common intention expressed, lead the other party, as

3 See SWJ Van der Merwe et al Contract General Principles 4 ed (2012) at 37.
4 Spenmac (Pty) Ltd v Tatrim CC 2015 (3) SA 46; [2014] ZASCA 48 (SCA) para 26.
5 Bird v Sumerville & another 1961 (3) SA 194 (A).
6 Kok v Osborne & another 1993 (4) SA 788 (SE).
7 At 799 C-D.
8Beyers v Mckenzie (1880) F 125 at 128.
9 Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992
(3) SA 234 (A) at 239I-240B.

a reasonable man, to believe that his declared intention represented his actual
intention? . . . To answer this question, a three-fold enquiry is usually necessary,
namely, firstly, was there a misrepresentation as to one party's intention; secondly,
who made that representation; and thirdly, was the other party misled thereby? . . .
The last question postulates two possibilities: Was he actually misled and would a
reasonable man have been misled?’

[26] Having determined the general principles relating to a unilateral
error in persona, I now turn to the facts to determine whether the
department’s mistake was justus, thereby avoiding the contract, or
conversely, whether the department’s expressed intention to be bound
could be reasonably relied upon by AITB 1 with the effect that the
contract would be regarded as valid and enforceable, notwithstanding the
existence of the material mistake.

The representation.
[27] On 5 June 2006, five days before the bid documents were
submitted, Mr Tucker wrote a motivational letter in support of the
respective bids. This letter referred to the successful conclusion of the
pilot project by the joint venture of African Bridge and iNathi. The letter
was written on the letterhead of African Bridge and had an African
Bridge logo. It further referred to previous developments African Bridge
had finalised for the department as proof that the bidder could
successfully complete projects.  This was a covering letter to a 28 page
document with the heading ‘Proposal for the Construction Contact
Centre’s Pretoria & Benoni—Tender No:GC 1417/05/2006’ and ‘AITB
(Pty) Ltd Consortium Proposal to Gauteng Department of Public
Transport Roads & Works.’ Furthermore, at the time of the writing of the
letter, the name of Crestwell had not been changed to AITB 1. The latter

had not completed any projects for the department whatsoever and did
not complete the pilot project of the department.

[28] Regarding the bid submission itself, it was a requirement that
certain certificates be attached to the bid documents as proof that the
tenderer complied with statutory prescripts. Although the tenders were
submitted in the name of AITB 1, the Unemployment Insurance Fund
reference numbers, the Pay As You Earn numbers and VAT registration
numbers used in the bid documents, were those of African Bridge.
Furthermore, the bid documents required information relating to the
number of years the bidding company had been in business; the number
of employees employed by the bidding company; the assets of the
company; the income of the company for the previous six months; and
the value of the work performed by the bidding company for the previous
three years. The information supplied in the documents relating to these
aspects was that of African Bridge and not AITB 1. Further relevant
questions posed in the bid documents were: ‘Do you share any facilities?’
and ‘Did the firm exist under a previous name?’  The answers to both
these questions were ‘No’, whereas the true position was that AITB 1 and
African Bridge had exactly the same address and as stated previously the
name of AITB 1 was changed the day before the bid documents were
submitted. Correspondence subsequent to the award of the tenders
continued referring to African Bridge by both the department and Mr
Tucker himself.

[29] The minutes of the DAC meeting make it clear that the department
intended to contract with a joint venture of African Bridge and iNathi.
The correspondence and further documentation shows that the intention
of the department never changed.

[30] In this regard Mr Tucker had deliberately set out to create the
impression that it was African Bridge and not AITB 1 that submitted the
tender bid. This is clear from the letter accompanying the bid documents
that referred to African Bridge having successfully completed the pilot
project and two other projects; the name of Crestwell being changed to
AITB 1, which closely resembled the name of African Bridge and the
acronym used by African Bridge; and the information in the bid
documents relating to African Bridge and not AITB 1. The only inference
is that these actions were done solely to confuse and obscure.

[31] The court a quo found the following.
‘ On a consideration of all the facts, I am satisfied that Tucker conveniently used the
name of AITB [African Bridge] instead of the plaintiff [AITB 1] to present to the
defendant that the same company that successfully completed the pilot project with
Inathi, was the one bidding for tenders 1417, 1418 and 1419. He knew that had the
true state of affairs come to the attention of the department, the bid by the plaintiff
would not have been accepted. The plaintiff simply did not qualify in any respect for
the tender.’

[32] I agree with this conclusion. It is clear that Mr Tucker deliberately
misled the department to create the impression that it was African Bridge
contracting with the department and not a different entity with no
experience, no assets and no personnel.

[33] The department was clearly mistaken with regard to the entity with
whom it thought that it was contracting. There is no doubt that the
department intended to award the tenders to African Bridge, a company
that it was familiar with and which had completed the pilot project and
complied with all the requirements of the department in respect of the

particular tenders.  The department’s continued reference to African
Bridge and not AITB 1 bears witness to what the department intended.  It
was also clearly a material mistake, and Mr Tucker conceded that if the
tenders were submitted with the particulars of AITB 1, it would not have
been awarded the tender as it had no personnel, assets or track record
with the department.
[34] Furthermore, the mistake of the department was justus as the
actions of Mr Tucker were deliberately taken to mislead. It was
reasonable for the department to conclude that it was accepting the tender
of African Bridge as Mr Tucker had deliberately created the confusion.
The minutes of the meeting of the DAC show that the department was of
the view that it was African Bridge that had submitted the tenders. Such
mistake in respect of the identity of the other contracting party was
fundamental.
[35] Therefore, there was a material and justus error in respect of the
contracts purportedly entered into between AITB 1 and the department in
respect of tenders 1417 and 1418. In such a situation, there is no contract
and both are void ab initio. However, there is a further matter to consider,
as the court below was of the view that in spite of there being a material
mistake initially, there was subsequently a valid counter-offer by the
department addressed specifically to AITB 1, which was accepted, and
which gave rise to valid contracts in respect of tenders 1417 and 1418.
Did the agreement of 6 July 2006 constitute a valid counter-offer by
the department to AITB 1 that was accepted by Mr Tucker on behalf
of AITB 1?
[36] The court below held that the department and AITB 1 did enter
into contracts in respect of tenders 1417 and 1418, in spite of the initial

error relating to the contracting parties, due to the following: (a) The bid
documents were submitted in the name of AITB 1;(b) the letter awarding
the tender to African Bridge on 28 June 2006 was changed on 5 July 2006
by Ms Mokgoro to read that it was awarded to AITB 1; and (c) the
meeting of 6 July 2006 between Ms Rose Fraser, Keshwar and Mr Tucker
resulted in Mr Tucker and Mr Keshwar signing the agreement presented
to them. This was the so-called counter offer that both Mr Tucker and Mr
Keshwar signed ‘on behalf of their respective companies’.  The court a
quo found that the re-issue of the letters of award in the name of AITB 1,
which were signed by Ms Mokgoro, had the effect that a reasonable man
would have believed that the department accepted AITB 1 as the other
contracting party.
[37]  The letters of notification of the award of the tenders to the joint
venture of African Bridge and iNathi, dated 28 June 2006, setting out the
necessary arrangements to be made for the signing of the contracts were
addressed to African Bridge. The agreements dated 6 July 2006,
(representing the contracts referred to in the letters of award) presented
by the department to Mr Tucker and Mr Keshwar, were similarly
addressed to African Bridge and iNathi as a joint venture.  It is important
these documents are dated 6 July 2006, a day after the letters of award
were changed to refer to AITB 1 and not African Bridge. The respective
contracts had the following provision relating to a Service Level
Agreement (SLA):

‘This signed agreement will be followed by
A Service Level Agreement will be drafted by the GDPTRW [Gauteng Department of
Public Transport, Roads and Works] for both parties, i.e. African Information
Technology Bridge (Pty) Ltd and iNathi Technology Holdings (Pty) Ltd (Joint
Venture)’.

[38] At the end of the letters of confirmation and appointment,
provision was made for the signatures of Ms Rose-Fraser on behalf of
‘DPTRW’ (ie the department), Mr Tucker on behalf of ‘AITB’ (ie
African Bridge) and Mr Keshwar on behalf of iNathi. In respect of tender
1417, Mr Tucker did not sign in the designated place but signed a
handwritten addendum dealing with the arrangements of Mr Keshwar and
Mr Tucker ‘on behalf of their respective companies’. The agreement
relating to tender 1418 was signed by Mr Tucker in the designated space,
which made provision for his signature as ‘Nicholas H Tucker, For and
on behalf of AITB who warrants the authority thereto.’ It is common
cause that the Service Level Agreements were not signed in respect of
1417 and 1418.

[39] It is important that although Mr Tucker had the name of the
company changed on the letters awarding the tender, the next day he did
not raise the fact that the contracts were not in AITB 1’s name (according
to Mr Tucker, the correct contracting party) or inform Ms Rose-Fraser
that the information needed to be corrected. Mr Tucker, furthermore,
signed these agreements on behalf of African Bridge.

[40] The court below found that these agreements comprised the
counter offer by the department to AITB 1 that the latter had accepted.
This cannot be. These documents were addressed to African Bridge
which is indicative of the fact that at that stage the department still
intended to contract with African Bridge.  This contract was in any event
a consequence of the tender process. As found above, the exercise of the
option, posed by the tender was due to mistake and rendered the contract
void ab initio. The so-called counter-offer was still not addressed to
AITB 1. Thus it cannot be said that a new contract was entered into as the

contemplated contracts could only be completed with a party after a
tender process. Furthermore, the record does not disclose that the DAC
ever considered awarding the tender to AITB 1. The court a quo found
that the tenders would not have been awarded to AITB 1 if the
department had not made a mistake. Besides that, the letter of award
envisaged that the parties had to enter into an agreement. The agreement
of 6 July was that agreement and it was not a separate, self-standing
contract.

[41]  I am accordingly of the view that the department proved that the
contracts with AITB 1 were vitiated by the mistake. Therefore the appeal
should be dismissed. There was no cross-appeal against the order that was
granted in respect of the first claim against the department based on
tender 1417. This is understandable as the department conceded that the
work in respect of tender 1417 had been partially completed.

[42] The following order is made.
The appeal is dismissed with costs, including the costs of two counsel.

__________________________
I Schoeman
Acting Judge of Appeal

APPEARANCES

For Appellant:
I Moosa
Instructed by:
Carls Attorneys, Bassonia
Matsepes Inc, Bloemfontein

For Respondent:

Q Pelser SC (with him R Kgoroeadira)
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein