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[2010] ZAGPJHC 35
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Thabo Mogudi Security Services CC v Randfontein Local Municipality and Another (08/19424) [2010] ZAGPJHC 35; [2010] 4 All SA 314 (GSJ) (7 May 2010)
IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
(REPUBLIC OF SOUTH AFRICA)
CASE NUMBER : 08/19424
In
the
application
between
THABO MOGUDI SECURITY SERVICES CC
Applicant
and
RANDFONTEIN LOCAL MUNICIPALITY
First Respondent
MABOTWANE SECURITY SERVICES CC
Second Respondent
JUDGMENT
Andr
é
Gautschi AJ
Introduction
The applicant,
a provider of security services, was the unsuccessful tenderer with
regard to the provision of security services
and armed reaction for
the first respondent, a local municipality, the contract for which
was ultimately awarded to the second
respondent, another provider of
security services.
The applicant
sought the following relief :
"1. Extending the time limit of 180 days for the
institution of this application to the date of institution thereof.
1A Condoning the applicant's non-compliance with
sections 3(1) to (2)(b)(ii) of the Institution of Proceedings against
Certain Organs
of State Act, 40 of 2002. (
sic
)
2 Reviewing and setting aside the first respondent's
decision not to accept the applicant's tender to provide security
services
and armed reaction ("the services") submitted in
response to the first respondent's invitation for bids number 8/2007
("the applicant's tender").
3. Reviewing and setting aside the first respondent's
decision to re-invite tenders for the provision of the services.
4. Reviewing and setting aside the first respondent's
decision to accept the second respondent's tender to provide the
services.
5. Setting aside the contract between the
respondent
s
for the provision of the services with effect from the end of the
month immediately following upon the month in which this order
is
made.
6. Ordering the first respondent to accept the
applicant's tender, and enter into a contract with the applicant for
the provision
of the services for a period of 36 months.
7. Ordering the first respondent to pay the amount of
R4 682 913,00 to the applicant in compensation.
8. Ordering the first respondent to pay the applicant's
costs of this
application
.
9. If the second respondent or any other person or
persons oppose the
application
, ordering
the second respondent or such other person or persons to pay the
applicant's costs of this
application
jointly and severally with the first respondent, the one paying the
other or others to be absolved."
The facts
Any tender
process of the first respondent would go through the following
steps:
The bid specification committee, whose function is to compile the
specifications for each procurement of goods or services
by the
first respondent.
The bid evaluation committee, which has to evaluate the bids
received in accordance with the specifications for the procurement
of specific services and/or goods. It must submit a report and
recommendation regarding the award of the bid and any other
related
matter to the bid adjudication committee. I shall refer to this
committee as "the evaluation committee".
The bid adjudication committee has to consider the report and
recommendations of the evaluation committee and either make a
final
award or make a recommendation to the municipal manager to make a
final award (depending on the power delegated to it),
or make
another recommendation to the municipal manager on how to proceed
with the relevant procurement. I shall refer to
this committee as
"the adjudication committee".
The decision would then be taken by the municipal manager, unless
the adjudication committee was empowered to and did make
the
decision.
On 31 May 2007
the first respondent published an advertisement calling for
proposals for the provision of security services and
armed reaction
(henceforth referred to simply as "the services") to the
first respondent. The proposed contract period
was 12 months. (The
contract period was later changed to 36 months.)
The applicant
and two others submitted bids.
The task of
the evaluation committee was thereafter to ensure that the
appointment of the service provider was procedurally correct,
was
fair and transparent, complied with the supply chain management
policy and that the adjudication committee was able to make
its
report with maximum
information
, and then
to obtain the approval of the adjudication committee.
In its
evaluation, the evaluation committee gave the applicant the highest
score, and recommended the following :
"
[The
applicant] met all the requirements.
They scored the highest points.
They had a proposal that responded to the
requirements.
There would be negotiations for the final terms
of the contract to be arranged with [the applicant].
[The applicant] be awarded the bid at a contract price
of R9 393 153.12 (VAT Included)."
There is a
dispute about whether this is the correct version of the evaluation
committee's report. The first respondent attached
a copy of "the
official report", which was said to be "the correct
evaluations report". The recommendation
therein is identical
for the first part, but adds the following after "(VAT
included)" :
"
●
for
a period of 36 months.
The business premises, ammunition, control
room, vehicles, protective clothing & other equipment must be
inspected prior to
the signing of the agreement."
I would be bound to accept the first respondent's version in this
regard
1
but I do not believe that the discrepancy is of any moment.
The
adjudication committee then considered the matter. At a meeting
held by that committee on 6 August 2007, the following is
recorded :
"3. Mr Lethetsa took the panel threw the next
report of the security and armed reaction. The chairperson raised a
concern
about the armed reaction services from the providers from
where Mr Lethetsa responded by saying that the armed reaction service
is part of the conditions in the document. The chairperson made it
very clear that it is essential for the provider to render
armed
reaction services at all time. Mr Dhlamini then raised a question by
asking the location of the company whereby Mr Lethetsa
responded by
saying that the company is situated in Mohlakeng. The panel then
approved that [the applicant] could be appointed
subject to the
conditions being met according to the agreement." (
sic)"
Whether as a
result of the recommendation in the "correct report", or
of its own accord, the adjudication committee
requested the director
of public safety of the first respondent, a Mr Lethetsa, to conduct
an inspection of the applicant's business
premises, to determine the
suitability and capacity of the applicant to provide the services.
His report is dated 5 September
2007, and recorded the
following findings :
"
The company
does have a two way radio communication.
The company does not have a panic button but they claim
that it is easy to arrange.
The company currently has only 3 bakkies but the number
can easily be increased should they win the tender.
The company does not have any firearms but will
sub-contract National Force Security Services for this function as
was presented
in their tender
document
.
The company will sub-contract Astek Emergency Response
to provide the armed response function.
The company currently has 41 guards employed and 45 on
standby."
The report then continues :
"Based on the abovementioned findings, [the
applicant] were found to be reasonably ready to take on the
responsibility of providing
a security service to Randfontein local
municipality with the very stringent conditions attached to the
agreement. The agreement
should also be for an initial period of 12
months and not 36 months as initially envisaged."
For some
reason which is not made clear in the papers, the acting director of
public safety, a Mr Molao
2
,
furnished a
memorandum
dated 12 September
2007 directly to the municipal manager, concerning the appointment
of a security service provider. The purpose
of the
memorandum
appears from the first paragraph thereof, which reads :
"The purpose of this report is to inform the RLM
3
Municipal Manager about the call for proposal tender for a Security
Company to provide security service for the entire RLM Buildings
and
properties."
The
memorandum
then refers to the scoring
of the three tenderers. It then states the following :
"The Evaluation Committee recommended the company
with the highest points on condition that the following critical
aspects
are met :
Radio communication
Panic Button system
Adequate vehicles
Armed response capability
Armed guard capability – firearm
inventory
Staff capacity (guards).
The findings were as follows :
No panic buttons
Only 3 bakkies (vehicles) available (no
firearms) No armed response capacity (41 guards employed and 45
standby).
It is therefore against this background that a decision
was to be made as to whether [the applicant] meets the condition as a
suitable
bidder. If not, the most suitable service provider should
be preferred.
The second most suitable service provider Armed Security
International met the criteria but the issue was that the company
operates
from Roodepoort area and had a high price. However, they
made a commitment to employ locally and establish an office within
RLM
if appointed."
The municipal
manager rebuffed this direct approach to her in a
memorandum
dated 17 September 2007 addressed to Mr Molao , which reads :
"Your
memorandum
dated 12
September 2007 refers.
A decision was taken by the adjudication committee to
conduct site inspections. My concerns were around recommendation
issues by
your department, given the findings on the said inspection.
In my opinion, it would only make sense to conduct a
site inspection for the second preferred company and submit well
informed recommendations
and motivations to the adjudication
committee and not to myself."
Although it
was submitted to me by counsel for the applicant that the
adjudication committee had made a recommendation, and the
municipal
manager had made a decision, it appears from a proper reading of the
document
s that the adjudication committee
was still collecting
information
, and had
not yet made a recommendation to the municipal manager, by the time
the below mentioned mayoral committee meeting took
place.
The mayoral
committee meeting of the first respondent was scheduled for
20 September 2007. For purposes of the meeting,
Mr Lethetsa
prepared a progress report on the rationalisation of the first
respondent's security, which included a copy of his
report of 5
September 2007. The meeting of the mayoral committee took place on
20 September 2007 and resumed on 15 October 2007.
Between these
two meetings, the municipal manager addressed a confidential
memorandum
dated 27 September 2007 to the
directors of public safety and finance. In view of its importance,
I quote it in full :
"
WITHDRAWAL OF TENDER : SECURITY SERVICES
A tender was issued by the Randfontein Local
Municipality through the Directorate Public Safety for acquisition of
security services
for a period of 3 years. The three year period was
a deliberate move from the side of council as we believed that this
could put
us in a better bargaining position in respect of
specialised rates.
I must state my dissatisfaction in the manner in which
the entire process was handled. A recommendation was made by the
adjudication
committee to conduct site inspections as means to
determine the capacity of the service providers to deliver on the job
at hand.
The Director Public Safety made recommendations that were a
clear disregard the whole intention of determining the capacity to
deliver, and instead recommends an action that is even contrary to
the specifications of the tender. This matter has been taken
up with
the Director.
It was further recommended that another site inspection
be conducted as it was clear from the Director's memo that the
service provider
did not meet the requirements. Kindly note that all
my correspondences on the matter were marked confidential, as this
was still
a pending matter. To my dismay, the very same memo was
included in a report on the status of security matters to the mayoral
committee.
I view this as an act of negligence on the side of the
Director Public Safety as I deemed that
information
to be confidential. It is for this reason that it is proposed that
the tender be reversed and re tendering to be looked at as
a matter
of urgency. The legal implications due to the negligence from the
side of the Director Public Safety will be discussed
privately in
detail with him.
I trust you find the above is order." (
sic
)
At the meeting
on 15 October 2007, three members of the adjudication committee (one
being the chairperson) were present. During
the course of the
meeting various councillors "attacked" (clearly only
verbally) the members of the adjudication committee
who were present
and insisted that the tender should be awarded to the applicant.
According to the municipal manager, it was
apparent that "various
councillors were adamant that the applicant be appointed and the
adjudication committee was considered
obliged to do so."
The municipal
manager considered the conduct of the councillors to be quite
improper, by reason of the provisions of section 117
of the Local
Government Municipal Finance Management Act, No 56 of 2003 ("the
MFMA"), which reads as follows :
"117
Councillors barred from serving on
municipal tender committees
No councillor of any municipality may be a member of a
municipal bid committee or any other committee evaluating or
approving tenders,
quotations, contracts, or other bids, nor attend
any such meeting as an observer."
The municipal manager took the view, so she says, that the conduct of
the councillors at the aforesaid meeting constituted a breach
of the
provisions of section 117 of the MFMA Act. Accordingly, she decided
that the integrity of the tender process had been compromised
and
that it was prudent to set aside the tender process and to start the
process afresh.
This is not
what the applicant was told at the time. The applicant received a
letter dated 17 October 2007, the relevant part
of which reads :
"Randfontein was unable to make an appointment on
the process that was followed and will therefore resumes the
process."
(
sic
)
There was no mention in that letter or any subsequent correspondence
that the process had been compromised.
The tender
process then commenced afresh. It was advertised again on 25
October 2007 with a closing date of 15 November 2007.
In the
aforesaid letter of 17 October 2007 the applicant was invited to
participate in this process. It did not do so and in
the event the
second respondent was awarded the contract. The second respondent
had not been part of the first tender process.
The applicant
made no effort to interdict the second tender process or the
awarding of a contract to the second respondent.
Did the applicant's tender meet the specification?
The first
respondent contends that the applicant's tender did not meet the
tender requirements as set out in the invitation to
tender.
In the first
place, it was pointed out that the applicant apparently did not have
firearms or an armed response function. The
applicant's response is
that they had planned to sub-contract these functions, as was
advised to Mr Lethetsa and as is recorded
in his report dated 5
September 2007. The applicant points out that clause 33 of the
special conditions of contract, which would
have formed the basis of
the contract between them, allowed for the appointment of
sub-contractors by successful bidders, as
a matter of right. The
applicant had also, in its bid, revealed the fact that it would be
make use of sub-contractors. I do
not believe that this is a valid
criticism by the first respondent.
The second
criticism is that the applicant changed the specifications, by
changing "1 Armed officer" to be placed at
each of two
venues during the day to "Un 1 armed officer", presumably
meaning "1 unarmed officer". It motivated
this in its
tender as averting a security risk. The applicant submitted that
the evaluation committee had obviously accepted
this advice because
it recommended to the adjudication committee that the applicant's
tender be accepted. In my view, the applicant
was not entitled to
change the specifications but this is seemingly not a material
matter, and did not feature in the deliberations
or recommendations,
or indeed in the first respondent's reasoning after the event, until
the point was raised in the
answering
affidavit
. I do not believe that the
applicant's tender could be said to be deficient for this reason.
I therefore
find that the applicant's bid met the tender requirements.
Did the adjudication committee or municipal manager appoint the
applicant?
The applicant
contends that the adjudication committee decided at a meeting on 6
August 2007 to award the tender to the applicant.
The relevant part
of the minute of that meeting has been quoted in paragraph 9
above.
The last
sentence ("the panel then approved that [the applicant] could
be appointed subject to the conditions being met according
to the
agreement") may give the impression that the applicant had been
approved, but upon a careful reading it is tentative
and
conditional. It is also a minute of a meeting of the adjudication
committee, and not a decision as conveyed to the municipal
manager.
It records no more than the internal thoughts of the adjudication
committee.
The power to
make decisions had not been delegated to the adjudication committee.
This was an allegation made in a supplementary
answering
affidavit
, which could not be refuted in
the reply thereto. The adjudication committee could therefore not
make the decision itself, but
had to make a recommendation to the
municipal manager. There is in any event no proof that the
adjudication committee purported
to make the decision itself and
thereafter conveyed that decision to the interested parties.
There is also
no proof, and indeed the
document
s
indicate the contrary, that the adjudication committee made any
recommendation to the municipal manager. The process was stopped
by
the municipal manager before that stage was reached.
The applicant
also repeatedly contends that the municipal manager made decisions.
Her
memoranda of 17 and 27 September 2007 are
cited in support. However, the memorandum of 17 September 2007
quite properly directs
the process back to the adjudication
committee, and the memorandum of 27 September 2007 expresses
unhappiness with the state
of affairs, and foreshadows the events
which in fact occurred thereafter. The facts show that the
municipal manager made no
decision on awarding the tender, and that
the only decision she made was to abort the process.
Accordingly,
no decision to appoint the applicant was in fact made.
The decision to abort the process
The facts show
(despite submissions to the contrary) that the adjudication
committee had not yet made its recommendation to the
municipal
manager at the time when the mayoral committee meeting took place.
Accordingly, there was very real interference with
the functioning
of the adjudication committee by the mayoral committee, which would
in my view have vitiated the process had
it continued. The
municipal manager rightly, in my view, decided to scrap the process,
and commence afresh.
Applicant's
counsel submitted that this was not the true reason for failing to
award the contract to the applicant. In the first
place, he
submitted, this was never given as a reason to the applicant until
the
answering
affidavit
was received. In the second place, it appears from the municipal
manager's
memorandum
dated 27 September
2007 that the decision to reverse the process and call for new
tenders had already been made by that date,
and it was therefore not
the events of 15 October 2007 which triggered the decision. That
places too simplistic a gloss on the
import of the
memorandum
of 27 September 2007 and the significance of what happened at the
mayoral committee meeting on 15 October 2007. The
memorandum
of 27 September 2007 records the municipal manager's dissatisfaction
with the manner in which the entire process was handled,
and in
particular
that Mr Lethetsa's report of
5 September 2007 was placed before the mayoral committee, since
it had no place amongst those
document
s.
She also recorded that the applicant appeared not to have the
capacity to deliver, and had recommended "an action that
is
even contrary to the specifications of the tender" (I presume
she means the question of the unarmed guard instead of
the armed
guard). The
memorandum
continues :
"... it is proposed that the tender be reversed and retendering
to be looked at as a matter of urgency".
Accordingly, no
decision had been taken but the events of 15 October 2007 were
indeed foreshadowed. The importance of the political
interference
is no afterthought, even if it was not revealed earlier than the
answering
affidavit
.
I therefore do not believe that the applicant's complaints in this
regard are well founded.
The applicant
contended in its
replying affidavit
that
what occurred at the meeting of the mayoral committee on 15 October
2007 was not a contravention of section 117 of the MFMA.
It will be
remembered that that section prohibits a councillor from being a
member of or attending any meeting of any committee
relevant to
tender adjudication or acceptance. Thus, the applicant contends,
the first respondent does not allege that any of
the councillors was
a member of any of the committees involved, nor that they attended
any meeting of those committees. Technically,
that is correct.
However, the section was clearly enacted in order to ensure that
politicians should not interfere in the adjudication,
recommendation
or acceptance of tenders by a local authority such as the first
respondent, in order to maintain the impartiality
and integrity of
the process. Politicians are by their nature agents for
constituencies, and not impartial as officials of an
organ of state
ought to be. The plain intention of the section is therefore to
avoid any involvement of councillors in the process
and, by their
actions at the meeting of the mayoral committee, they plainly
transgressed section 117.
The municipal
manager's decision to abort the process can therefore not be
faulted.
Audi alteram partem
Applicant's
main argument revolved around the
audi alteram partem
principle. As I understand the argument, the principle was sought
to be invoked in two contexts.
The first is
that, if the applicant's tender did not meet the specifications in
the enquiry
document
, and for that reason
it was not awarded the contract, the applicant had to be afforded a
hearing in order for it to explain itself.
Such a suggestion places
an impossible burden upon any tender adjudication process. In every
such process, certain tenders
will be found to be inadequate, in
respects such as failing to price a
particular
item, quoting for a substitute item instead of the item specified,
or the like, or simply being inferior to the other bids.
I have
never known it to be required that the tender adjudicator must
afford each such tenderer whose bid is rejected a hearing.
This
aspect is however academic in the light of my finding that the
applicant's tender did meet the specifications in the enquiry
document.
Secondly, it
was suggested that when the municipal manager decided to abort the
tender process and call for tenders afresh, she
had to afford the
applicant a hearing, which she failed to do. Counsel for the
applicant sought to tie this aspect in with the
municipal manager's
view that the applicant's tender had not met the specifications in
the enquiry document. I do not however
find in the papers any
suggestion that the one aspect could be linked to the other. The
perceived interference by the mayoral
committee was in my view
unacceptable, regardless of whether the applicant would otherwise
have been awarded the tender or not.
I nevertheless
proceed to consider whether the applicant should have been afforded
a hearing before the municipal manager decided
to abort the tender
process and call for tenders afresh. It is well recognised that the
right to
audi alteram partem
is dependent upon the
circumstances. It is "contextual and relative"
4
.
The right to make representations will usually arise where a person
may be adversely affected by a decision
5
.
It is also no answer to say that the person who would be adversely
affected by a decision may have little or nothing to urge
in regard
thereto, or that a fair hearing could have made no difference to the
result
6
.
This is however not so much a case where nothing would be achieved
by affording the applicant a hearing on the basis that the
applicant
could not conceivably have contributed anything, but a case where
the circumstances dictate that the applicant should
not be afforded
any opportunity to make representations. Although the decision to
abort the process would adversely affect the
applicant, it did not
have a right to be awarded the contract. In terms of the written
rules of bidding, which the applicant
initialled :
"11.6 Randfontein Local Municipality is not bound
to accept any of the bids submitted."
If the first respondent decided not to accept any of the tenders, and
not to continue with that particular tender process, but
to commence
the tender process afresh, it was entitled to do so and did not
thereby adversely affect any rights which the applicant
had.
Applicant's counsel also did not attempt to persuade me that the
decision to abort the tender process
per se
, divorced from the
decision that the applicant had failed to meet the tender
requirements, merited a hearing. This is no doubt
because the
applicant was free to participate in the second tender process
7
.
This latter consideration renders the decision in
Logbro
Properties
8
distinguishable. Whilst the decision to commence the tender process
afresh is the prime reason why I believe that tenderers were
not
obliged to be afforded the right to make representations, there is
the added consideration that the first respondent had no
choice but
to cancel the process in the circumstances of this matter. Such
circumstances are also entirely internal to the first
respondent,
and, as it is not suggested that any of the tenderers played any part
in the events which led to the process being
aborted, the views of
the tenderers are in my opinion irrelevant.
The applicant
also relies on the case of
Du Bois v Stompdrift-Kamanassie
Besproeiingsraad
9
.
In that case the applicant had hired a picnic and camping site from
the
respondent
for a period of two years,
on which it carried on business as Meiringspoort Avonture. When the
lease approached its end, the
applicant proposed to enter into a
long-term lease with the
respondent
.
However, the
respondent
put the lease out
to tender. The applicant and two others tendered. The
respondent
decided not to accept any of the tenders on account of a report on a
site inspection, which was critical of the applicant's management
of
the site, and a water report, which was dated two years prior to the
decision and contained many complaints regarding the
applicant's
management of the site. The applicant was not informed of these
adverse reports. The applicant took the
respondent
on review. The court set aside the
respondent
's
decision not to accept the applicant's tender on the basis that the
respondent
had failed to inform the
applicant of the adverse reports and its intention to rely thereon
against the applicant, and had failed
to give the applicant an
opportunity to respond to that adverse
information
prior to its decision.
In the
Stompdrift
decision, Griesel J relied on two cases in
support of the approach which he took in that matter. The first was
Nisec (Pty) Ltd v Western Cape Provincial Tender Board &
Others
10
.
That case however dealt with the cancellation of a contract on the
basis of fraud by the tenderer, and is therefore distinguishable
from the present case as well as the
Du Bois
case. Clearly,
in such a case, the tenderer must be given an opportunity to be
heard. The second case on which he relied was
National &
Overseas Modular Construction (Pty) Ltd v Tender Board, Free State
Provincial Government & Another
11
,
in which the tender board declined to award one of three tenders to
the applicant because it was of the opinion that awarding
all three
tenders to one tenderer may overload the contractor with work, but
it did not advise the applicant of this opinion
or give it an
opportunity to deal therewith. The case is therefore support for
the finding which Griesel J made.
Griesel J
came to his conclusion notwithstanding submissions made to him that
his approach would make the tender process
"onhanteerbaar en
onuitvoerbaar". He rejected those submissions on the basis
that the
application
of the
audi
alteram partem
in considering tenders would not unduly bog down
the process, because the requirements for procedural fairness are
contextual
and relative, and every situation does not call for a
full blown hearing.
Imposing a
burden on the person or entity calling for tenders, to afford a
tenderer an opportunity to be heard whenever some adverse
consideration is to be taken into account against that tenderer,
would indeed in my view bog down the process unnecessarily,
and, in
context, is not in my view required. The point can be illustrated
with reference to the facts of this case. There were,
in the first
tender process, three tenderers. Their bids were examined by the
evaluation committee, which subjected each bid
to a points scoring
system, and ultimately arrived at a total mark for each bid. That
process in itself involves a value judgment,
where one tenderer is
rated, on a number of aspects, and is ultimately found to be better
or worse than another tenderer. Wherever
it scores a lower mark, it
is adversely affected thereby, i.e. by the product of a value
judgment, yet no-one could reasonably
suggest that the lower scoring
tenderers ought to be heard on the evaluation process. Then the
matter served before the adjudication
committee, whose function, as
we have seen, was to consider the report and recommendations of the
evaluation committee and either
make a final award, or recommend to
the municipal manager to make the final award, or make another
recommendation to the municipal
manager. In that process of
necessity the adjudication committee too will consider one tenderer
to be inferior to another.
That is the nature of adjudicating
tenders. Again, no-one would suggest that the lower rated tenderer
should be given an opportunity
to be heard on this value judgment.
Does the position then change where the adjudication committee
investigates a tenderer more
thoroughly? I think not.
That is not to
say that an unsuccessful tenderer is remediless. It may well be
able to show that the decision is not rationally
connected with the
reasons. But affording an unsuccessful tenderer a remedy based on
that ground does not involve affording
it a remedy based on breach
of the
audi alteram partem
principle. In my view, a tender
process is ordinarily a process which would not demand that the
audi
alteram partem
principle be applied.
Can these
principles be reconciled with the findings and conclusions reached
in the
Stompdrift
and
National & Overseas Modular
Construction
cases? It seems to me that those cases are
distinguishable, in that in each case a factor outside of the tender
specifications
and bid details was taken into account. In the
Stompdrift
case it seems as if the site inspection report and
the water report were extraneous to the
information
which the tenderer would have expected to be in front of those
adjudicating his bid. The
National & Overseas Modular
Construction
case also involved the tender board taking into
account, as I read it, an extraneous factor, namely the ability of
the tenderer
to cope with all the work for which it tendered.
However, if I am wrong that these cases are distinguishable, then I
respectfully
disagree with them, and decline to follow them.
Accordingly,
to relate these principles back to the facts of the present case,
had the applicant's tender failed to meet the specifications
in the
enquiry document, that is not a matter on which I would have upheld
the applicability of the
audi
principle. In regard to the
decision to abort the tender process, the
audi
principle is
also not applicable, for reasons already stated.
The powers of the municipal manager
Applicant's
counsel placed before me elaborate submissions concerning the
separation and interaction of functions of the various
committees
and the municipal manager, leading to the concluding submission that
the municipal manager does not retain a residual
power to make a
final award in respect of a tender which is not preferred by the
evaluation and adjudication committees, or to
reject a tender which
is preferred by those committees. He submitted that if the
municipal manager disagrees with any of the
decisions of either of
those committees, his or her powers are limited to referring the
matter back to those committees for reconsideration.
It is
unnecessary that I enter into this interesting debate, because, as I
have already found, the municipal manager made no decision
(save to
abort the process), she therefore did not purport to override any
recommendation or decision of the evaluation or adjudication
committees, and the point sought to be made simply does not arise.
Review of the second tender process
I include
under this head both the reasonableness of the decision to re-invite
tenders, and the second tender process itself,
because I perceive
these to be part and parcel of the same point.
The applicant
contends that putting it to a second tender process was prejudicial
to it, specifically because its original tender
price would be known
to its competitors, who could thereafter easily have undercut that
tender price. There is much merit in
this point. The first
respondent's policy provides for bids to be opened in public and for
tender prices to be made known.
Even if the tender price was not
read at the bid opening stage, any competitor would easily be able
to obtain that
information
12
.
As against
that prejudice must be weighed the need for the first tender process
to be aborted and a new tender process to be entered
into. Once it
is accepted that the first tender process was compromised and simply
could not be allowed to continue or to stand,
then the only avenue
open to the first respondent was to initiate a fresh tender process.
In that
situation, I do not believe that the applicant's prejudice is a
factor, but if it is, then in the balancing process it
pales into
insignificance.
The first
respondent contends that the applicant does not point to any flaw in
the second tender process, and that it therefore
cannot attack that
process or set the contract awarded to the second respondent aside.
If the
municipal manager's decision to abort the first tender process, and
to embark upon a second one, cannot be faulted, then
there is no
justifiable attack at all on the second process, and it must stand.
However, had there been merit in the attack
on the first process,
then the second process ought never to have happened, and it must in
my view fall in the resultant domino
effect.
The length of contract if the applicant were successful
The applicant
submitted that, should it be successful, I should order the first
respondent to conclude a contract with it for
a period of 36 months
commencing from the date of my order.
I believe that
such an order would be grossly inequitable and quite wrong. The
first respondent advertised for an agreement which
was to commence
on 1 July 2007 and (in its amended form) would endure for a period
of three years. By the time of the hearing
before me, more than two
and a half years thereof had elapsed. To order a further contract
for a period of three years would
mean that the first respondent
would be saddled with a contract for effectively five and a half
years instead of three. The
first respondent is no doubt subject to
budgetary constraints, and it would not be for a court to impose
upon it a contract for
a longer period than it itself wanted and
budgeted for. I believe that it would be quite wrong to impose a
fresh contract upon
the first respondent, rather than to allow the
applicant simply to complete the last part of the existing contract.
The case
of
Eskom Holdings
13
is an example where a contract had less than three months to run,
and the SCA upheld the High Court's order that the award of
the
tender be set aside. In his reasoning, Cloete JA referred to the
fact that the contract had less than three months to run
14
.
He did not postulate a contract being awarded afresh, but plainly
envisaged that at best the respondent would be able to complete
the
last few months of the contract.
The delay in launching the
application
Prior to the
enactment of the Promotion of Administrative Justice Act, No 3 of
2000 ("PAJA"), judicial review at common
law was required
to be instituted within a reasonable time of the impugned
administrative conduct. The reason for requiring
such a limitation
was to ensure finality in any decision-making process, and to limit
any prejudice to the
respondent
in review
proceedings due to unreasonable effluxion of time. The common law
limitation however provided for the exercise of
judicial
discretion
15
.
The application of the rule that a judicial review must be brought
within a reasonable time, requires consideration of two
questions,
namely :
(a) was there an unreasonable delay?
(b) if so, should the delay in all the circumstances be condoned?
16
In regard to the second question, the incidence of prejudice to the
respondent
and the extent thereof are
relevant factors
17
.
As to whether the applicant's prospects of success are to be taken
into account in a consideration of whether condonation would
be
granted, the position has been made clear by the majority judgment in
Gqwetha's
case
18
.
The approach is not simply to consider what are the prospects of the
challenged decision being set aside, but to evaluate what
the
consequences of setting the decision aside are likely to be. But
that does not, in my view, preclude a court from having regard
simply
to the prospect of the challenged decision being set aside for, as
the minority in
Gqwetha's
case pointed out
19
,
if there are no prospects of the administrative decision being set
aside, there is no reason why a court should still have to
embark on
an enquiry as to what meaningful consequences there would be were it
to be set aside.
Section
7(1) of PAJA has attempted to curb the uncertainty of the common law
position by placing a time limit on the period within
which judicial
review proceedings must be instituted. Section 7(1) reads as
follows :
"7.
Procedure for judicial review
(1) Any proceedings for judicial review in terms of
section 6(1) must be instituted without unreasonable delay and not
later than
180 days after the date-
(a) subject to subsection (2)(c), on which any
proceedings instituted in terms of internal remedies as contemplated
in subsection
(2)(a) have been concluded; or
(b) where no such remedies exist, on which the person
concerned was informed of the administrative action, became aware of
the action
and the reasons for it or might reasonably have been
expected to have become aware of the action and the reasons. "
Section 9 of
PAJA is also relevant in this regard. It reads :
"
9.
Variation of time
(1) The period of-
(a) 90 days referred to in
section
5
may be reduced; or
(b) 90 days or 180 days referred to in sections 5 and
7
may be extended for a fixed period,
by agreement between the parties or, failing such
agreement, by a
court
or
tribunal
on application by the person or
administrator
concerned.
(2) The court or tribunal may grant an application in
terms of subsection (1) where the interests of justice so require. "
Section 7(1)
requires that the proceedings for judicial review must be instituted
"without unreasonable delay and not later
than 180 days ...".
This entails a twofold enquiry. The first is whether the
proceedings were instituted "without
unreasonable delay".
If they were not, then the enquiry ends there, without having regard
to whether such proceedings were
instituted within a period of 180
days. In other words, a period less than 180 days could be found by
the court to constitute
unreasonable delay. It is only if a delay
of 180 days is not unreasonable that the time limit of 180 days
becomes relevant.
On a narrow
reading of section 9(1), it is only the period of 180 days that may
be extended under that section, and not any lesser
(unreasonable)
period. However I do not believe that to be the intention of
section 9(1), and such a narrow reading would give
rise to an
anomaly and an absurdity. There would be no reason to differentiate
between 180 days and a shorter period in deciding
whether to grant a
court the power to extend the period, and to allow a court the power
to extend the period of 180 days but
not to allow it the power to
extend a lesser unreasonable period. The period of 180 days (or any
shorter period) may therefore
in my view be extended (assuming no
agreement) by the court "where the interests of justice so
require". In such a
case :
". . . the party seeking [an extension of time]
must furnish a full and reasonable explanation for the delay which
covers the
entire duration thereof and relevant factors include the
nature of the relief sought, the extent and cause of the delay, its
effect
on the administration of justice and other litigants, the
importance of the issue to be raised in the intended proceedings and
the prospects of success."
20
The
application
for a review was launched some
two months after the 180 days had expired. The explanation is thin,
to say the least. In essence
it amounts to the fact that the
applicant was badly advised by an inexperienced counsel
21
and it was only at about the time the 180 days expired that present
counsel for the applicant was engaged. The
application
then took a further period of time to be finalised.
As has been
seen above, the question of prejudice is a relevant consideration.
The first respondent attacks the adequacy of the
explanation
furnished, but does not point to any prejudice that it has suffered
by reason of the delay. It appears from the
scant
information
placed before me that it is not the applicant that was blameworthy
but its legal representatives. In the end result, I may have
been
inclined to grant condonation (more properly an extension of time in
terms of section 9 of PAJA) if there were prospects
of the
challenged decision being set aside and, with such setting aside, a
prospect of something meaningfully being achieved
22
.
However, as appears from what I have said above, there is no
prospect of success, and condonation should for that reason in
my
view be refused.
The issue of compensation and the Institution of Proceedings
against Certain Organs of State Act
The issue of
compensation does not arise in this matter in view of the
conclusions I come to.
The defence
raised by the first respondent regarding the applicability of the
Institution of Proceedings against Certain Organs
of State Act, No
40 of 2002, relates only to the claim for compensation. Once it
becomes unnecessary that I deal with the issue
of compensation, this
issue also falls away.
Conclusion
The
application
is accordingly dismissed with
costs.
________________________________
ANDR
É
GAUTSCHI
ACTING JUDGE OF THE HIGH COURT
Date
of hearing
:
11
and 12 February 2010
Date
of judgement
:
7
May 2010
For
applicant
:
Adv
H H Steyn
:
(instructed
Frans Mphatswe Attorneys)
For
first respondent
:
Adv
G Hulley
(instructed
by Maserumule Attorneys)
No
appearance for second respondent
1
Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) at 634/5
2
I assume the director was then on leave.
3
Clearly meaning Randfontein Local
Municipality.
4
Chairman, Board on
Tariffs and Trade, and Others v Brenco Inc and Others
2001 (4) SA 511
(SCA) at [19]
5
Chairman, Board on
Tariffs and Trade v Brenco Inc
supra
at [13]
6
Administrator,
Transvaal, and Others v Zenzile and Others
1991 (1) SA 21
(AD) at 37C-F;
Logbro
Properties CC v Bedderson NO and Others
2003 (2) SA 460
(SCA) at [24]
7
Albeit with the disadvantage which that entails,
dealt with in paragraph [49] below
8
Logbro Properties v
Bedderson
supra.
See also
Milnerton
Lagoon Mouth Development (Pty) Ltd v Municipality of George and
Others
[2005] JOL 13628
(C), quoted in
Thebe ya Bophelo Healthcare
Administrators (Pty) Ltd and Others v National Bargaining Council
for the Road Freight Industry and
Another
2009 (3) SA 187
(W) at [29]
9
2002 (5) SA 186
(C) (Griesel J)
10
1998 (3) SA 228
(C)
11
1999 (1) SA 701
(O)
12
Cf
Steenkamp NO v Provincial Tender Board,
Eastern Cape
2007 (3) SA 121
(CC) at
[49]
13
Eskom Holdings Ltd
and Another v New Reclamation Group (Pty) Ltd
2009 (4) SA 628
(SCA)
14
At [15]
15
Wolgroeiers
Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad
1978 (1) SA 13
(A) at 39A-C, 41B and 42A-D;
Harnaker
v Minister of the Interior
1965 (1) SA
372
(C) at 380C-E;
Yuen v Minister of
Home Affairs & Another
1998 (1) SA
958
(C) at 968J-969A
16
Gqwetha v Transkei
Development Corporation Ltd and Others
2006 92) SA 603
(SCA) at 607A-B;
Associated
Institutions Pension Fund and Others v Van Zyl and Others
2005 (2) SA 302
(SCA) AT 321E-F
17
Gqwetha v Transkei
Development Corporation Ltd
supra
at 609H-I
18
Gqwetha v Transkei
Development Corporation Ltd
supra
at 614J-615F
19
At 611I-J
20
Camps Bay Rate
Payers' and Residents' Association & Another v Harrison &
Another
(560/08)
[2010] ZA SCA 3
(17
February 2010) at para [54]
21
Not counsel who argued the matter before me.
22
Gqwetha v Transkei
Development Corporation Ltd
supra
at 614J-615C