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[2016] ZAGPJHC 196
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Kenako Consulting (Pty) Ltd v City of Johannesburg Property Company (Soc) Ltd and Others (08/36380, A5023/2015) [2016] ZAGPJHC 196 (1 July 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number:
08
/36380
Case
No.: A5023/2015
DATE:
1 JULY 2016
In
the matter between:
Kenako
Consulting (Pty)
Ltd
..........................................................................................
Appellant
And
City
of Johannesburg Property
Company
(SOC)
Ltd
...........................................................................................
First
Respondent
City
of Johannesburg Property
Metropolitan
Municipality
...........................................................................
Second
Respondent
City
Manager, City of
Johannesburg
.............................................................
Third
Respondent
The
Zoo Lake Bowling
Club
.........................................................................
Fourth
Respondent
Coram:
VALLY J, MOSHIDI J, MUDAU J,
Heard:
11 MAY 2016
Delivered
1 JULY 2016
Summary:
Administrative law- PAJA- Review-Appeal-Setting
aside of a tender.
ORDER
The
entire order of the court a quo is set aside and replaced with the
following. The application is dismissed. There shall be no
order as
to costs.
JUDGMENT
Vally J (Moshidi
J and Mudau J concurring):
Vally J
Introduction
[1]
Aggrieved at a decision of a single bench
of this court, Wright J presiding, the appellant, with the leave of
that court, seeks
the intervention of this court to overturn the said
decision.
[2]
The appeal was not opposed by any of the
respondents. It is, nevertheless, necessary for this court to satisfy
itself that there
is merit in the appeal before it can grant the
order sought by the appellant.
Background
[3]
The first respondent, City of Johannesburg
Property Company (SOC) Ltd, is a company established by the second
respondent to manage
and develop its properties. The second
respondent, City of Johannesburg Property Metropolitan Municipality
(the City) is established
in terms of the
Local
Government: Municipal Systems Act 32 of 2000
.
It is an organ of state. It owns an immovable property which is
located in the north of the City and which was bequeathed to it
in
1904. This property is popularly known as Zoo Lake by City residents.
It consists of a large public space that is open to, and
well
utilised by, residents and visitors to the City of Johannesburg.
Situated on it are a number of bowling lawns used by persons
who play
the sport of bowling. Those players belong to the fourth respondent,
the Zoo Lake Bowling Club (the Club). Members of
the Club have played
bowls on this property since 1904. Also situated on the property is a
clubhouse where members of the public
are able to socialise. The
clubhouse is adjacent to the bowling lawns. The clubhouse and the
bowling lawns are fenced-off, thus
forming a separate self-standing
property within the larger property of the Zoo Lake. Henceforth in
this judgment the self-standing
property will be referred to as “the
property”.
[4]
As from 1 August 2000 the Club leased the
property from the City. The lease was for a period of nine years and
eleven months. The
Club paid a paltry sum of R499 per annum for the
use of the property. The lease agreement contained a clause allowing
for either
party to terminate it by giving three months’
notice. Neither party terminated the agreement prematurely. It
terminated by
effluxion of time on 30 June 2009. Even though the
agreement had terminated the City and the Club did nothing. They
continued as
if nothing had changed until 11 November 2010, when the
City issued the Club with a written notice to vacate the property
within
three months (the notice).
[5]
The Club having received the notice took no
action until 24 January 2011 when it wrote a letter to the City
challenging the legality
of the notice. It attempted to have the City
accept that the notice constituted administrative action. The City
did not agree with
the Club. Nevertheless, the Club succeeded in
remaining on the property for a long time after the period referred
to in the notice
had expired. During that period of extended stay the
Club continued to pay the paltry sum of R499 per annum for its
occupation.
[6]
One and a half years after the notice was
issued, the first three respondents considered and embarked on a
public tender process
in order to acquire new leases in respect of
five of the City’s properties, which included the present
property. To
that end, a tender invitation was published in
various major newspapers on 20 July 2012. The tender closed on 20
August 2012, and
nine bids were received in respect of the property.
[7]
The City established a Bid Specification
Committee (BSC) to identify the minimum requirements that had to be
met for the bid to
be successful and to establish criteria for the
assessment of bids. In terms of the criteria established all
potential bidders
were informed that in order for their bid to be
successful they would have to show,
inter
alia
, that the manner in which they
would utilise the property would “
serve
the community’s social needs in terms of providing valuable
recreation and sports opportunities to the communities.
”
[8]
The bidding process was divided into two
stages – during the first stage all bids were to be assessed
for their functionality
only. Only bidders who acquired eighty points
or more were to be considered during the second stage. All others
were immediately
rejected. During the second stage bids were to be
assessed according to their price and their contribution to Black
Economic Empowerment
(BEE).
[9]
Once the bids were received, they were
filtered by a Bid Receipt Committee to check whether they complied
with basic aspects such
as providing all the documentation that was
necessary in order to evaluate the respective bid. Thereafter, bids
were submitted
to a Bid Evaluation Committee (BEC) for evaluation.
After evaluating the bids, the BEC was to make a recommendation to
the City
as to which bid best fit the City’s requirements.
[10]
The Club participated in the bidding
process, as did the appellant. Its bid like that of all the other
competing bids, including
the appellant’s, was assessed by the
BEC. The Club failed to acquire the minimum of eighty points during
the first stage
of the assessment. Its bid was accordingly rejected.
The reasons for rejecting the Club’s bid were that:
[10.1]
its bid was based on a partnership with another company operating
under the name and style of Ooba Poonage (Pty) Ltd) (Ooba).
Ooba was
a company that was essentially owned by the wife of the deponent to
the founding affidavit. He is the secretary of the
Club. Ooba entered
into a contract with the Club allowing it to sell food and beverages
at the Clubhouse. As a result of this Ooba
was effectively running a
business at the Clubhouse. It was a lucrative business. According to
the evaluation of the BEC the Club’s
bid was essentially
focussed on continuing with this business and not one of “
serv(ing)
the community’s social needs in terms of providing valuable
recreation and sports opportunities to the communities
”;
and,
[10.2]
it was only concerned with generating a profit for Ooba and not
really concerned with developing any sports opportunities,
including
opportunities for members of the public to engage in the sport of
bowls.
[11]
The appellant’s bid, on the other
hand, was ultimately deemed to be the one that best fit the
requirements and needs of the
City, thus resulting in it being
successful. It was found to have provided a sound basis for holding
that once awarded the lease
it would utilise the property in a manner
that would advance the social and sporting needs of the community.
Having decided to
award the lease to the appellant the City concluded
an agreement (the lease agreement) with it.
[12]
The Club was aggrieved by decision of the
City. It brought an application to have the decision reviewed and set
aside (the review
application). Apart from that relief it also sought
from the court an order declaring the lease agreement to be
pro
non scripto
and of no legal force. It
asked further that the court declare it to be the successful bidder
and order the City to conclude a
lease agreement with it.
[13]
The application was brought in August 2013.
By launching the application the Club was able to ensure that the
appellant and the
City were unable to take immediate advantage of the
agreement they had concluded. The matter finally came before Wright J
on 24
August 2014. In the meantime the Club continued to occupy the
property and pay R499 per annum for that privilege. This continued
until sometime just before 24 August 2014, when the court issued an
order evicting it from the property. In essence, the Club had
secured
occupation of the property for a period of almost three years after
it had received the notice to vacate. The Club did
not appeal the
eviction order granted against it, but persisted with the review
application.
The
grounds upon which the review application was brought
[14]
The application for review was very wide in
scope. The Club raised every conceivable point it could think of. It
claimed that a
public participation process was not undertaken prior
to the decision being made and that this was required in terms of s
80(2)
of the
Municipal Systems Act, 32
of 2000
, thus rendering the decision
unlawful; that the decision was not rationally connected to the
information before the BEC; that the
decision was influenced by
irrelevant considerations; that the BEC failed to apply its mind to
the facts before it; and the BEC
was biased against the Club; and
finally, the Club claimed that because it was not provided with the
reasons for the impugned decision
within 90 days of its request, the
decision must be deemed to have been taken without good reason, as
envisaged in s 5(3) of the
Promotion of
Administrative Justice Act, 3 of 2000
(PAJA).
The decision of
the court
a quo
[15]
The
court
a
quo
found that the rejection of the Club’s bid because it had
failed to show that the primary function for which the property
would
be put to use was not really for the benefit of the community was
wrong. It found that the bid by the Club was “
really
one of partnership or joint venture between the Club and Ooba
”
[1]
,
and though the BEC did not see it as such, there is, nevertheless, no
basis to find that the BEC’s decision was either irrational
or
unreasonable for failing to do so. The court
a
quo
observed:
“
In
my view… the decision to exclude the Club cannot be said to be
irrational when one considers (the City’s) evidence
and the
Club’s tender documentation in isolation from other reasoning
behind the decision to exclude the Club.
”
[2]
[16]
But, that was not the end of the matter.
The court
a quo
continued and held that because the BEC found there to be “
no
social nature
” to the planned
usage of the property by the Club, the BEC committed a reviewable
irregularity. It reasoned as follows:
“
In
my view the irrationality in the reasoning that “
social
nature is not there
”
skews the decision to the extent that the decision to exclude the
Club is neither reasonable nor rational within the meaning
of these
words in administrative law. An irrational decision can hardly be
said to be reasonable. Under Section 6(2)(f)(ii)(cc)
of PAJA a court
may review a decision where it is not rationally connected to the
information before the administrator. In my view
the decision to
exclude the Club is reviewable.
”
[3]
[17]
The court
a
quo
then went on to evaluate the BEC’s
decision to award the tender to the appellant and found this to be
irrational. Its reasoning
is articulated in the following paragraphs:
“
(The
appellant), as part of its bid, stated that it would “
Create
a community facility supported by the Psychological Society of South
Africa for social enablement, cohesion and support.
”
This vague statement has led to the award of the tender to (the
appellant) for the purpose, amongst others, of establishing
and
running a drug rehabilitation centre on the property. In my view a
drug rehabilitation centre falls outside the bid specifications
which
limit the proposed use of the property to “
valuable
recreations and sports opportunities to the communities
”.
(The
deponent to the appellant’s answering affidavit) denied that
(the appellant) had tendered on the basis that it would
run an
in-house medical facility to house individuals afflicted by drug
abuse on a 24-hour basis. He did not deny Kenako’s
(the
appellant) proposed “
community
facility
”
is a drug rehabilitation centre.
”
[4]
Do
the court
a quo
’s
findings constitute a misdirection?
[18]
The
court
a
quo
’s
finding that the BEC erred in not recognising that the Club’s
bid was social in nature is not supported by the facts.
There can be
no doubt that the Club’s bid focussed almost exclusively on the
intention of the Club to continue to sell food
and other beverages to
members of the public. Such a use of the property is no different
from the multitude of private businesses
which sell food and drink.
That this activity falls within the broad understanding of the word
“socialising” does not
mean that the Club was intending
to use the property in the manner set out in the bid specification
document by the BSC. There
was sufficient evidence before the BEC to
find that the Club, through Ooba, was driven purely by commercial
considerations, with
the core of its business being the sale of food
and alcoholic beverages, and that when necessary the provision of
entertainment
services to attract patrons.
The
Club was merely intending to use the property to run a private
business. The BSC intended it to be used by people who came to
socialise and play sport but who may not want to consume any food or
drink. The Club was merely interested in securing a lease
on
favourable terms so that it could advance its commercial interests.
Judged by the contents of its bid it had not demonstrated
any
interest in “
serv(ing)
the community’s social needs
”
whether “
in
terms of providing valuable recreation and sports opportunities to
the communities
”
or otherwise. The finding by the BEC to this effect was correct. In
any event, it could under no circumstances be said that
the finding
was not based on the evidence before the BEC, for it certainly was.
Further, it could not be said that the finding
was either
irrational
[5]
or one that “
no
reasonable decision-maker could reach.
”
[6]
For these reasons, I find that the finding of the court
a
quo
that the BEC committed a reviewable irregularity was wrong.
[19]
The same applies to the second finding of
the court
a quo
.
In this case the finding is more problematic. Here the court
a
quo
decided to make a finding rejecting
the
ipse dixit
of the deponent to the appellant’s answering affidavit without
any basis for so doing. The deponent to the appellant’s
answering affidavit averred that the appellant’s bid contained
no claim that the appellant intended to use the property for
a drug
rehabilitation centre. The court
a quo
acknowledged this averment but then went on to say that the deponent
“
did not deny tha
t
Kenako’s
(the appellant)
proposed community
facility is a drug rehabilitation centre
”
and on this reasoning found that the appellant’s bid indicated
that it was intent on hosting a drug rehabilitation
centre on the
property. Such a finding is in clear contradiction to the unambiguous
ipse dixit
of the deponent to the appellant’s answering affidavit. There
is just no basis for such a finding. There is no evidential
support
for it. The deponent denied that the appellant intended to host a
drug rehabilitation centre on the property. There is
no need for him
to further deny that the community facility is a drug rehabilitation
centre. On any reading of his averment the
community facility will
not be a drug rehabilitation centre. And even if it was, there is no
evidence that this is contrary to
the bid specification that the
lessee should use the property to “
serve
the community’s social needs in terms of providing valuable
recreation and sports opportunities to the communities.
”
The appellant’s bid was multi-faceted. It is for that reason
that the BEC found it to best fit the bid specifications
of the BSC.
It was not based on the expectation that the appellant was to provide
a drug rehabilitation facility on the property.
The appellant had no
such intention. Hence there could not have been any expectation on
the part of the BEC to that effect. The
decision to award the tender
was based on other factors, and its decision, in my view, was
certainly one that a person acting rationally
or even reasonably
would arrive at.
[20]
As both these errors by the court
a
quo
resulted in it making an order that
otherwise would not be made, they constitute a misdirection-one that
can only be remedied by
this court. It resulted in the granting of
relief, when none should have been granted. The granting of the order
has prejudiced
the appellant who is now entitled to have it
overturned.
[21]
Finally, it bears mentioning that as the
Club chose not to oppose the appeal there is no need to discuss the
other grounds for review
it raised in the court
a
quo.
Order
[22]
The following order is made:
1
The appeal succeeds.
2
The entire order of the court
a
quo
is set aside and replaced with the
following:
2.1
The application is dismissed.
2.2
There shall be
no order as to costs.
For the
appellant: Adv. M Smit
Instructed
by: Siva Chetty
No
appearances for any of the Respondents.
[1]
Judgment
at [22]
[2]
Judgment
a
t
[24]
[3]
Judgment
a
t
[28]
[4]
Judgment
a
t
[30] – [31]
[5]
See:
Potgieter
& Another v Howie & Others NNO
2014 (3) SA 336
(GP) at [20]; Pharmaceutical
Manufacturers
Association of SA & Another: In re: Ex parte President of the
Republic of South Africa & Others
2000
(2) SA 647
(CC) at [85] - [86].
[6]
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[2004] ZACC 15
;
2004
(4) SA 490
(CC) at
[44]
.