The case before the court involved Transnet Limited, a government-owned company, and Goodman Brothers Pty Ltd, a tenderer who was unsuccessful in their bid. The main issue at hand was whether Transnet had an obligation to provide reasons to an unsuccessful tenderer who requested them. The court had to determine whether this obligation was required under the Constitution.

The court concluded that Transnet's actions in calling for and adjudicating tenders constituted administrative action. They noted that the Constitution guarantees the right to lawful and procedurally fair administrative action, as well as the right to be furnished with reasons for such action. The court emphasized that the right to reasons is essential for ensuring transparency, fairness, and public confidence in the administrative decision-making process.

Transnet argued that it was not obligated to provide reasons because it was now a limited company and not a government entity. However, the court rejected this argument, noting that the government still owned all the shares in Transnet and it still provided a public service.

The court also rejected Transnet's argument that Goodman had no right or interest to obtain reasons. They held that Goodman had a legitimate expectation to know why their tender was rejected and that their rights were affected by Transnet's decision.

In conclusion, the court ruled in favor of Goodman, stating that Transnet was obligated to provide reasons for their decision. The appeal was dismissed, and Transnet was ordered to pay the costs.

CASE NO 373 98  IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA  In the matter between  Transnet Limited  Appellant  and  Goodman Brothers  Pty  Ltd  Respondent  BEFORE  HEFER ADCJ  HARMS  OLIVIER  SCHUTZ JJA and  MTHIYANE AJA  HEARD   DELIVERED   19 SEPTEMBER 2000  9 NOVEMBER 2000  Duty to give reasons to unsuccessful tenderer under the Constitution administrative action   right or interest to obtain reasons   W P SCHUTZ                                                                2        JUDGMENT                                                                      SCHUTZ JA    1   This appeal raises the question whether the Constitution obliges the  appellant  Transnet Ltd     Transnet      once a part of government as the South  African Railways and Harbours  now a limited company owned by the government   to give reasons to an unsuccessful tenderer who asks for reasons  why another has  been preferred over him  The matter came before Blieden J  whose decision in  favour of such an unsuccessful tenderer  the respondent  Goodman Brothers  Pty   Ltd     Goodman      is reported as Goodman Bros  Pty  Ltd v Transnet Ltd 1998   4  SA 989  W   The detailed facts may be gleaned from this report    2   The case before us can be decided on s 33 of the 1996 Constitution    3  Pending the passing of legislation by the national legislature such as is envisaged by  subsections 32 2  and 33 3   item 23 of Schedule 6 provides for an interim reading  of subsections 33 1  and  2   As the tenders with which we are concerned were  dealt with before any such legislation had been passed  the interim reading has  application  It reads      Every person has the right to  a   lawful administrative action where any of their rights or interests is affected or threatened    b   procedurally fair administrative action where any of their rights or legitimate expectations is affected or threatened    c   be furnished with reasons in writing for administrative action which affects any of their rights or interests unless the reasons for that action have been public  and   d   administrative action which is justifiable in relation to the reasons given for it where any of their rights is affected or threatened       3   It is  c  particularly with which we are concerned  As it falls within the Bill  of Rights  Chapter 2  it is one of the cornerstones of our democracy and is  limitable only to the extent allowed by s 36    4   4   Three matters have to be decided in order to determine whether  c  entitles  Goodman to reasons  They are  first  whether calling for and adjudicating tenders  constituted    administrative action     secondly  whether Goodman had a    right    or  an    interest     and thirdly  whether  if he did  the right or interest was    affected      Section 39 enjoins that when interpreting the Bill of Rights a court must promote  the values that underlie an    open    and democratic society based on human dignity   equality and freedom    5   Before dealing with each of these points it is useful to look at the background  against which the Constitution is set and which explains many of its provisions   Baxter Administrative Law  1989  at 741 sums up the position as it was      In the absence of statutory authority there is no general duty upon public authorities to give reasons  Although the state of the law has been widely criticized  no general legislative provision has been enacted to correct the situation      The value of giving reasons is set out by the same author at 228  as follows    5     In the first place  a duty to give reasons entails a duty to rationalize the decision  Reasons therefore help to structure the exercise of discretion  and the necessity of explaining why a decision is reached requires one to address one   s mind to the decisional referents which ought to be taken into account  Secondly  furnishing reasons satisfies an important desire on the part of the affected individual to know why a decision was reached  This is not only fair  it is also conducive to public confidence in the administrative decisionmaking process  Thirdly   and probably a major reason for the reluctance to give reasons   rational criticism of a decision may only be made when the reasons for it are known  This subjects the administration to public scrutiny and it also provides an important basis for appeal or review  Finally  reasons may serve a genuine educative purpose  for example where an applicant has been refused on grounds which he is able to correct for the purpose of future applications       6   The Constitution has plainly set out to remedy the previous position and  without even dealing with particular words or resorting to authority  to my mind a  straightforward reading of the words leads to the inevitable conclusion that the  former deficiency has been remedied in a case such as is before us  If it is  necessary to resort to s 39  which I do not think it is   then I do not consider that  an    open       society    countenances the type of secrecy in the tender process  such   6  as Transnet contends is permitted by the Constitution    7   Turning to the first question  whether administrative action was involved  it  has already been held in this court that the State Tender Board   s handling of  tenders for transport service for the government  constituted administrative action    in Umfolozi Transport  Edms  Bpk v Minister van Vervoer en Andere  1997  2  All SA 548  SCA  at 552 j   553 a  Howie JA pointed out that the steps that had  preceded the conclusion of a contract were purely administrative actions and  decisions by officials  whilst in addition public money was being spent by a public  body in the public interest  Naturally  said Howie JA  in such a case the subject  is entitled to a just and reasonable procedure  I agree entirely  Moreover  the same  considerations apply to Transnet    8   I do not think that anything can be made of the fact that Transnet is now a  limited company  The government still owns all the shares in it and thus has  ultimate control  It still provides a general service to the public  even though it is   7  now competition  and profit orientated  It still has a near   monopoly over rail  transport    9   It was presumably for reasons like these that counsel for Transnet conceded  that some of its actions amount to acts of administration  But a distinction was  sought to be drawn between different kinds of action  In this connection reliance  was placed on the judgment of the Constitutional Court in President of the  Republic of South Africa and Others v South African Rugby Football Union and  Others 2000  1  SA 1  CC  at paras 140 141  pp 66 67  There it was stated that  in determining whether an act is an administrative act the emphasis should be on the  function rather than the functionary  not on the arm of government to which the  actor belongs but on the nature of the power exercised  From this it followed that  the exercise of some of the powers of a member of the executive  the President in  that case  amounted to administrative action whereas exercises of other powers did  not  This reasoning was sought to be extrapolated to the procurement activities of   8  Transnet  Some of its actions are administrative  Others are not  Thus  so  proceeded  the argument  when Transnet invites tenders for the supply of  locomotives  its acts administratively  But when it invites tenders for toilet paper   or  as in this case  gold watches  it does not  I fail to see how such a distinction is  to be drawn  particularly where  as in this case  the purchase of watches is clearly  incidental to the exercise of Transnet   s general powers  The gold watches are  bought so that they may be used to secure the loyalty of employees  much as  salaries are paid to secure their services  For the reasons given I am of the view  that the actions of Transnet in calling for and adjudicating tenders constituted  administrative action  whatever contractual arrangements may have been attendant  upon it    10  Turning to the second question  the    right    or    interest     Transnet relied on  the unreported judgment of Heher J in SA Metal Machinery Co Ltd v Transnet Ltd   WLD 9 March 1998   in which the learned judge held that a person in a position   9  such as Goodman was  was    effectively a stranger to the tender process     the  passage is more fully quoted at 996H   997A of Blieden J   s judgment  and therefore  had no protectable right or interest entitling him to just administrative action  If that  were correct  every applicant for a permit would likewise have no right or interest   By contrast with the decision of Heher J  in Aquafund Pty Ltd v Premier of the  Province of the Western Cape 1997  7  BCLR 907  C  Traverso J identified the  right  at 913 I  as the right to obtain the information which the tenderer reasonably  required in order to enable him to determine whether his right to lawful  administrative action provided for in the interim Constitution had been violated  For  instance  reasons given may tell a tenderer that his goods did not comply with the  specification  He  knowing that they did comply  would then be able to take the  matter further  Without reasons he might be without remedy    11  Another valid approach is that the tenderer has the rights to lawful and  procedurally fair administrative action provided for in par  a  and  b   The rejection   10  of a tender affects these rights and they are protected by par  c     12  As to whether Goodman   s rights were    affected     the third question   I do  not think there is any doubt about it if the first two questions are settled adversely  to Transnet in the manner already expressed  Without reasons Goodman is  deprived of the opportunity  to which he is entitled  to consider further action    13   Further matters considered in the court below have fallen by the wayside   As will be seen at pp 997H   998D and 1001F  

Goodman Brothers (Pty) Ltd v Transnet Ltd (SCA373/1998) [2000] SCA