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Thursday, May 6, 2010

Chapter-15 Principle of Estoppel against Constitution-Part-15

The Principle of Estoppel against a Statue/Constitution

The principle applicable is embodied in the maxim privatorum conventio juri publico non derogat. It is almost universally acknowledged that estoppel cannot operate against a statute. Much less will it operate against provisions in a Constitution.[1]

Halsbury's Laws of England (4th Edn.) Vol. 16 at paragraph 1575 sets out the legal Position in England. The U.K. of course does not have a written Constitution.

"1515. Estoppel against Statute.: The doctrine of estoppel cannot be invoked to render valid a transaction which the legislature has, on grounds of general public policy, enacted is to be invalid, or to give the court a jurisdiction which is denied to it by statute, or to oust the court's statutory jurisdiction under an enactment which precludes the parties contracting out of its provisions. Where a statute, enacted for the benefit of a section of the public, imposes a duty of a positive kind, the person charged with the performance of the duty cannot by estoppel be prevented from exercising his statutory powers ............. "

Spencer Bower and Turner in their work Estoppel by Representation (2nd Edn.) at page 134 deal with the waiver of the protection of a statute. Where a certain transaction or a course of action is illegal and void and absolutely prohibited, no question of waiver can arise. In other cases it has been contended that a statutory provision for the benefit of a party could be waived. They state:

". The soundness of this contention in any particular case, whether of express contract or of estoppel (for the principles which govern the former obviously govern the latter also) depends upon the question whether the right which is abnegated is the right of the party alone, or of the public also, in the sense that the general welfare of the community, or the interests of the class of persons whom it is the object of the law to protect, cannot be secured in the manner intended without prohibiting the waiver or estoppel. In the case of express contract to waive it has always been held that the doctrine embodied in the familiar formula, quilbet potest renuntiare juri pro se introducto, is subject to the limitation that the renouncing party must be able to establish that the 'jus' was intended by the legislature for his benefit only pro se solo. If the public, or a class or section of the community, are interested, as well as himself, in the general observance of the conditions prescribed by statute, it has always been held on the ground of public policy that there can be no waiver, even by express contract or consent, of the right to such observance by any individual party; but where, on the other hand, no public interest, and no interest intended to be promoted or protected by the statute, is in the least affected by the contract or consent to waive, and the matter is one which concerns the parties alone, such contract or consent has never been interfered with, but on the contrary has always been enforced. So also, in cases of waiver by conduct which gives rise to an estoppel, the same essential distinction has always been observed. On the one side of the line are the cases where the estoppel or waiver, if allowed, would defeat the objects of the statute, and injure the interests of the public, or of persons other than the immediate parties, and where therefore the affirmative answer of illegality has prevailed, and the estoppel has been defeated. On the other side of the line are the cases in which no interests, other than those of the immediate parties, can possibly be affected by allowing the estoppel, which accordingly has in such cases usually prevailed.” In a case where the Court was examing the duty of the Provincial Tender Board, Capetown wherein it was alleged hat the Board while discharging the duty acted negligently, it was observed that:‘public policy does consider any act or omission by the Board, which results in anyone else suffering damages or economic loss, to be wrongful. It is unthinkable that the Board will have carte blanche to act as it pleases, irrespective of the loss which such actions may cause to others.[2]’In Steenkamp [supra] HARMS J quoted VAN ZYL J, after a close analysis of the case law, was more circumspect but also concluded that a tender board owes a legal duty to the successful tenderer in awarding a tender to that party. Paraphrased he reasoned as follows. All tenderers, successful and unsuccessful, are entitled to a lawful and fair process. Statutes dealing with tenders are enacted in the interest of both the state and of tenderers. An unsuccessful tenderer has a remedy in the form of a review whereas a successful tenderer, such as .., has none unless a damages claim is recognised. Claim is limited to out-of-pocket expenses and a damages award will not place a serious burden on the public purse. The threat of a damages claim will not make a tender board unduly cautious but will rather lead to a higher standard of care in accordance with the constitutional concept of accountability. The floodgate argument does not apply because it will only be successful tenderers (in this case two, Balraz and Pensecure) who could have claims once awards are set aside. It is foreseeable that a failure to comply with a statutory duty in the adjudication of a tender might result in the successful tenderer, who does not know of the irregularity, incurring expenses to perform in terms of the contract, and that such a tenderer might suffer loss in the form of wasted expenses if the award were to be set aside subsequently.’ The ‘duty of care’, VAN ZYL J continued, is not general, but relative or directional and the question was therefore whether such a duty was owed to Balraz where its tender offer was a nullity. He found that the absence of a valid tender meant that there could not have been any administrative relationship between Balraz and the Board. Consequently it could not have been within the reasonable contemplation of the Board that Balraz could suffer harm or loss when it directed its mind to the acts or omissions that were questioned. Lacking foreseeability of harm there could not be wrongfulness.[3]

In Maritime Electric the House of Lords held that an estoppel should not be enforced for reasons of public policy, on the basis that it was of general benefit to society that the revenue statute be complied with. In Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273, Lord Bridge said (at 289)

“It is well established that a statutory body cannot by contract fetter its own freedom to perform its statutory duties or exercise its statutory powers and by parity of reasoning it has been held that no such fetter can arise from an estoppel by representation: see Maritime Electric Co Ltd v General Dairies Ltd [1937] AC 610 and Southend-on-Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 416.



[1] Bindra's Interpretation of Statutes

[2] Steenkamp v Provincial Tender Board of the Eastern Cape (528/2004) [2005] ZASCA 120 (30 November 2005) THE SUPREME COURT OF APPEAL OF SOUTH AFRICA per HARMS JA, who also observed that:” The legal position of the Board was somewhat ambiguous. The intention was to set up an organ of state, independent of the provincial government, which had to advise and protect the Province during the procurement process of goods and services. However, the Board was also an arm of the provincial government with the power to act on its behalf and to bind it contractually. The Board had the sole power to procure supplies and services for the Province, it could conclude procurement agreements on the Province’s behalf and resile from them. In an appropriate case the Board could claim damages, presumably those suffered by the Province due to a breach of a contract concluded by the Board.”

[3] Steenkamp [supra] HARMS JA quoted VAN ZYL J.

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