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[2019] ZAWCHC 2
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Fidelity Security Services (Pty) Ltd v City of Cape Town and Others (A250/2018) [2019] ZAWCHC 2 (6 February 2019)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No:
A 250/2018
Before:
The Hon. Mr Justice Binns-Ward
The
Hon. Ms Justice Salie-Hlophe
The
Hon. Mr Justice Parker
Hearing:
29 January 2019
Judgment:
6 February 2019
In the matter
between:
FIDELITY SECURITY SERVICES (PTY)
LTD
Appellant
and
THE CITY OF CAPE
TOWN
First
Respondent
SECHABA
PROTECTION SERVICES
(WESTERN CAPE) (PTY)
LTD
Second
Respondent
ALL 4 SECURITY SERVICES
CC
Fourth
Respondent
JUDGMENT
BINNS-WARD J
(SALIE-HLOPHE and PARKER JJ concurring):
[1] This an appeal
against an order by the court a quo determining liability for costs
in a judicial review application. The
appeal has come before
the Full Court pursuant to leave granted by the learned judge at
first instance.
[2] The City of Cape
Town, which is the first respondent in the appeal, put out to tender
certain requirements that it had in respect
of the procurement of
guarding and security services. The tender invitation attracted
a large number of responses and several
of the tenderers were
subsequently awarded contracts. The second and third
respondents in the appeal, Sechaba Protection
Services Western Cape
(Pty) Ltd and All 4 Security Services CC, were amongst the successful
tenderers, but they were dissatisfied
with what they termed ‘
the
limited extent of
[their]
success
’. That
resulted in them instituting proceedings for the judicial review and
setting aside of the tender awards.
In their notice of motion,
they sought orders (i) reviewing and setting aside the City’s
decision to make an award in
the tender (ii) suspending the
effect of any order granted in terms of the primary relief sought
pending the completion of
a new tender process and (iii) directing
the City to initiate a new tender process within 30 days of the grant
of the primary relief.
As to the costs of the review, the
second and third respondents sought an order that the City, as well
as any other respondent
who opposed their application, should pay
their costs of suit.
[1]
The salient ground for the review was that the scoring of the tenders
had misdirectedly treated some tenders that were non-compliant
with
the statutorily regulated pricing provisions as acceptable tenders.
[3] The City and the
appellant, which, as one of the other successful tenderers, was the
eighth respondent in the review, delivered
notices of intention to
oppose the review application. It bears mention in this regard
that the founding affidavit in the
review application expressly
stated that the second and third respondents sought relief in the
review application only against
the City, and that the remaining
respondents had been cited ‘
merely as potentially interested
parties
’. Indeed, as apparent from the nature of the
relief sought - as described above - success by the second and third
respondents
in their application would not have had an immediate
effect on the contracts awarded to the successful tenderers pursuant
to the
impugned tender. Those contracts would remain in effect
until the completion of a new process in which the appellant and any
other interested party would obviously be free to participate.
[4] The City
compiled and made available, in terms of Uniform Rule 53, the
administrative record in the tender. The record
was voluminous,
running to approximately 17 000 pages. Subsequently, and
after being on the receiving end of an order
obtained through the
chamber book putting it and the appellant to terms in regard to the
delivery of their answering papers, which
had not been produced
within the time limit provided in the rules of court, the City
bethought its opposition to the review application.
It
consequently delivered an affidavit explaining why it would concede
the review. The City did not, however, accompany its
withdrawal
of opposition with a tender to pay the second and third respondents’
costs. The deponent to the City’s
affidavit explained the
absence of a tender of costs by stating that ‘
mulcting a
public body or a public official in costs when their action or
attitude, though mistaken, was bona fide and not grossly
irregular,
would normally be inequitable and would be detrimental to the proper
functioning of the public administration which
it is essential in the
public interest to maintain. Public bodies and public officials
should not be hampered in making decisions
they are required to make
for fear of costs orders being made against them in subsequent
litigation
’.
[5] Very shortly,
after the delivery of the City’s explanatory affidavit, the
appellant delivered its answering affidavit.
The appellant’s
answering affidavit, which we accept would have been prepared under
pressure of the aforementioned chamber
book order, and without
knowledge of the change of position by the City, challenged the
merits of the second and third respondents’
grounds of review.
However, the City’s concession of the merits of the review
challenge, which included the identification
of other fatal flaws in
the tender process, cut the ground from under the appellant’s
feet so to speak. The appellant
would have been well advised in
the circumstances to have promptly withdrawn its own opposition to
the review and to have tendered
the costs occasioned to the second
and third respondents in respect of the perusal of its answering
affidavit.
[6] The City’s
failure to concede any liability for the costs of the review and the
appellant’s failure to withdraw
its opposition in the light of
the City’s concession resulted in the delivery of replying
papers by the second and third
respondents. The reply, which
was delivered about one month after the aforementioned affidavits by
the City and the appellant,
also sought to effect certain amendments
to the notice of motion in the review. The contemplated
amendments, which were objected
to, are not material for present
purposes. The replying papers, which were predominantly
argumentative in character and did
not advance the case in any
factually relevant sense, elicited a so-called ‘further
affidavit’ by the appellant’s
general manager. The
appellant’s ‘further affidavit’ was delivered about
eight months after the delivery
of the replying papers in the
review. Its content was mainly argumentative, directed at
putting up the appellant’s
contention that it should not be
liable to pay any of the costs of the second and third respondents
and why, on the contrary,
the appellant’s
costs in the
review should instead be paid by either the City or the second and
third respondents.
[7] The resultant
deadlock about liability for costs resulted in the matter being set
down for argument before the judge a quo.
It is evident from
his judgment that the judge was persuaded by the City’s
argument that in principle it should not be mulcted
in costs for
having mistakenly made an unlawful administrative decision because it
had acted in good faith and without gross negligence.
The judge
absolved the City from any responsibility for the second and third
respondents’ costs of suit, but held that the
appellant should
be liable for those costs for having unsuccessfully entered into the
fray in the face of the notice that costs
would be sought against the
City and any other respondent who chose to oppose the review.
[8] The scope for
interference on appeal with a costs order is very limited. This
is because it is well established that the
making of such orders
involves the exercise by the judicial officer concerned of a true or
strict discretion, and intervention
on appeal is permissible only if
there has been a demonstrable failure at first instance to exercise
the discretion judicially
or that its exercise has been affected by
material misdirection.
[9] There is, in
addition, a reluctance by the courts as a matter of policy to
entertain appeals in situations in which the substantive
issues
between the parties have already been resolved or become moot and all
that remains in dispute is liability for costs.
This policy,
which previously found statutory expression in s 21A of the
Supreme Court Act 59 of 1959, has been reiterated
in
s 16(2)
of
the
Superior Courts Act 10 of 2013
. Mindful of this
consideration, the parties were called upon in terms of
s 16(2)(b)
to persuade us why the appeal should not be dismissed on the ground
that the decision sought would have no practical effect or
result
aside from a possible revisitation of the determination of costs.
[10] The parties
were unanimous in their submission that the circumstances were
sufficiently exceptional to merit our entertaining
the appeal
notwithstanding the generally applicable policy against doing so when
only costs are concerned. In this regard
the parties emphasised
that the perusal of the administrative record of 17 000 pages
had resulted in the issue in dispute
involving a very substantial sum
in money. They pointed to decisions in which the high amount of
the costs in issue had been
a consideration identified as sufficient
to constitute exceptional circumstances in the relevant sense.
An
en passant
remark supporting their argument is to be found
in
John Walker Pools v Consolidated Aone Trade & Invest 6
(Pty) Ltd (In Liquidation) and Another
2018 (4) SA 433
(SCA) at
para 8. The passing remark was inspired by the approach in
Oudebaaskraal (Edms) Bpk en Andere v Jansen van Vuuren en Andere
2001 (2) SA 806
(SCA) at 812D – E, where regard was had to the
peculiar circumstances of a case in which substantial costs had been
run up
in the litigation before the substantive issues had become
moot as being sufficient to warrant an appeal exclusively against a
costs order to be entertained. It seemed to us that the
circumstances in the current were quite closely comparable.
A further factor that weighed with us was that we had a strong
prima facie view that there had been a fairly obvious misdirection
by
the court a quo in the exercise of its discretion and that an
injustice would be visited if we declined to entertain the appeal
on
its merits.
[11] The approach of the court a quo overlooked the constitutional
character of the litigation and the established principles applicable
in respect of the determination of costs in such cases. A
judicial review challenge of the nature mounted by the second and
third respondents was essentially in defence of their fundamental
rights to lawful administrative action. The Constitutional
Court spelled out important guideline principles for the
determination of liability for costs in such matters in
Biowatch
Trust v Registrar, Genetic Resources, and Others
2009 (6) SA 232
(CC). In relevant part that judgment (at para. 23) firmly
established that ‘…
it is the State that bears primary
responsibility for ensuring that both the law and State conduct are
consistent with the Constitution.
If there should be a genuine,
non-frivolous challenge to the constitutionality of a law or of State
conduct, it is appropriate
that the State should bear the costs if
the challenge is good, but if it is not, then the losing non-State
litigant should be shielded
from the costs consequences of failure.
In this way responsibility for ensuring that the law and State
conduct are constitutional
is placed at the correct door
’.
[2]
[12] Had the court a
quo, as it was bound to, applied the principles enunciated by the
apex court, it would have held the City liable
for the second and
third respondents’ costs incurred the review application up to
and including attendances associated with
the delivery of the City’s
affidavit explaining its withdrawal of its opposition to the review
on its merits. Those
costs should have included the costs
reserved for later determination in the abovementioned chamber book
application. It
was materially misdirected of the court a quo
to have burdened the appellant with the costs that in constitutional
principle should
have been awarded against the City. The costs
incurred by the second and third respondents in taking issue in their
replying
papers with the City’s position on costs could
properly be left out of account, however, because the reply was
effectively
superfluous by reason of its argumentative character.
[13] The appellant’s
exposure to an adverse costs order in the review should have been
limited to joint and several liability
with the City in respect of
the costs in the chamber book application, and to a liability to pay
the costs occasioned by its answering
affidavit and the ‘further
affidavit’ in which it very misdirectedly sought to argue for a
costs order in its favour
against either the second and third
respondents or the City.
[14] The
circumstances were such that it was most unfortunate that the parties
were unable to settle the question of costs without
the necessity for
a hearing before the court a quo. The effect of the proper
application of the principles enunciated in
the
Biowatch
judgment should have been plainly evident to them. In my
judgment it would have been appropriate in the circumstances for
the
court a quo to have ordered the City and the appellant to bear joint
and several liability for the costs incurred by the second
and third
respondents in respect of the hearing before it in respect of the
costs dispute.
[15] It will be
apparent from what I have said thus far that the appellant’s
appeal will be upheld and the order made by the
court a quo will be
set aside. There were no conditional cross-appeals by either
the City or the second and third respondents,
but counsel were
agreed, rightly so in my view, that any setting aside by this court
of the costs order made in the court a quo
would require us to make a
substitutive costs order on the basis of a decision completely afresh
of the issue that was before the
court a quo. Such an order in
the form set out at the conclusion of this judgment will duly follow.
[16] It remains only
to consider the costs of the appeal. The appellant has been
successful. But the nature and extent
of its success make this
a peculiar case in which the general approach that costs follow the
result would not be in accordance
with justice. The costs order
that will be made in place of that made at first instance will, in
its essential respects,
be that for which the second and third
respondents always contended, and which, having regard to the
Biowatch
principle, the appellant and the City should long ago
have conceded. There is therefore no proper basis upon which
the second
and third respondents should be liable for the appellant’s
costs on appeal. The fact that the second and third respondents
were obliged to incur any costs in the appeal was essentially due to
the failure by both the City and the appellant to have made
appropriate tenders in their favour before the matter even came up
for hearing before the court a quo. It seems to me in
the
circumstances that the City and the appellant should in justice be
held jointly and severally liable for the second and third
respondents’ costs in the appeal, and that the City should be
held liable for part of the appellant’s costs in the
appeal.
[17] Regrettably,
there are other features about the appeal that merit reflection in
the formulation of the costs order to be made
in respect of the
appeal. The record on appeal ran to eight and a half volumes.
It included the entire record of the
review application.
Objectively, it was necessary for the court to have regard only to a
very limited part of that record
for the purposes of deciding the
issues in the appeal. There is an obligation on the parties in
terms of the practice directives
in force in this Division to
identify the passages of the record which, reasonably considered, it
should not be necessary for the
appeal panel to read. The
information is required to be included in the practice notes that
must accompany the parties’
respective heads of argument.
The parties are expressly reminded of this obligation in the notices
of set down that are sent
out by the registrar, which also inform
them of the dates by which their heads of argument must be
delivered. None of the
parties complied with these
obligations. In the result it was left to us to either
unnecessarily read the entire record,
or to rely on our instinct and
experience to ferret out what appeared to be germane to our task and
skip over the rest. Furthermore
only one of the three legal
teams involved in the appeal filed a list of authorities with their
heads of argument, as also required
in terms of the practice
directives.
[18] Non-compliance
with these practice directives has become all too common. The
practice directives set out measures and
procedures considered useful
and desirable to assist in the more effective and efficient discharge
of the judicial workload.
They have been compiled on the basis
of the collective experiences of the judges in this Division in the
course of discharging
their functions in a wide variety of matters.
Compliance with the practice directives should conduce not only
towards assisting
judges to do their work efficiently, but also, and,
in consequence of that, to the benefit of the community who bring
matters before
the courts of this Division for adjudication.
Enjoinders from the bench for more punctilious compliance with
the practice
directives do not seem to be particularly effective.
We have therefore considered it necessary to mark our displeasure at
the non-compliance in this case by depriving the parties in whose
favour costs are to be awarded on appeal of part of those costs.
The City ends up as the incidental beneficiary of this approach in
that the extent of its costs exposure to the appellant and the
second
and third respondents is consequently reduced. The comfort we
take from this otherwise eccentric incidence of the
order to be made
is that at least it is not the rates paying public that will get
punished in the process.
[19] The court a quo
made no provision in its order in respect of the costs of the
application to it for leave to appeal.
I think it may be
implied that the intention must have been that those costs should be
costs in the appeal, as is ordinarily the
case.
[20] The following
order is made:
1. The appeal is upheld.
2. The costs order made by the court of first instance is set aside
and substituted with an order in the following terms:
a.
The first respondent (the City of Cape Town) shall be liable for the
costs of suit incurred by the applicants in the review application
up
to and including any attendances associated with the delivery of the
affidavit
jurat
30 June 2015 explaining the first respondent’s
withdrawal of its opposition to the review on its merits.
b.
The eighth respondent (Fidelity Security Services (Pty) Ltd) shall be
liable for the costs of suit incurred by the applicants
in the review
application in respect of the perusal and consideration of the
answering papers delivered by the eighth respondent.
c.
The first and eighth respondents shall be liable jointly and
severally, the one paying the other being absolved, for the costs
incurred by the applicants in respect of the latter’s
application through the chamber book for an order putting the said
respondents to terms in regard to the delivery of their respective
answering papers.
d.
The first and eighth respondents shall be liable jointly and
severally, the one paying the other being absolved, for the costs
incurred by the applicants in respect of the hearing on the issue of
liability for costs in the review application.
e.
Save as provided in paragraphs a. to d. above, the parties shall bear
their own costs in the review application.
3. The first respondent is ordered to pay one half of the appellant’s
costs of suit in the appeal, such costs to include
the costs of the
application for leave to appeal.
4. The appellant and the first respondent shall be liable jointly and
severally, the one paying the other being absolved, to pay
three
quarters of the second and third respondents’ costs of suit in
the appeal.
A.G.
BINNS-WARD
Judge
of the High Court
G.
SALIE-HLOPHE
Judge
of the High Court
M.K.
PARKER
Judge
of the High Court
[1]
A number of other ancillary orders were sought in the notice of
motion, but they are not material for the purpose of this judgment.
[2]
Footnote omitted.