About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2019
>>
[2019] ZAGPJHC 540
|
|
Marce Projects (Pty) Ltd and Another v City of Johannesburg Metropolitan Municipality and Another (33992/2019) [2019] ZAGPJHC 540; [2020] 2 All SA 157 (GJ) (17 December 2019)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
CASE
NO: 33992/2019
In
the application for an urgent interim interdict:
MARCÉ
PROJECTS (PTY) LTD
First
Applicant
MARCÉ
FIRE FIGHTING TECHNOLOGY (PTY)
LTD
Second
Applicant
And
CITY
OF JOHANNESBURG METROPOLITAN MUNICIPALITY
F
irst
Respondent
TFM
INDUSTRIES
Second
Respondent
REASONS
FOR THE INTERIM INTERDICT
MODIBA
J:
INTRODUCTION
[1]
On 18 November 2019, I granted with reasons to follow, an interim
interdict in the terms set out below:
“
It is ordered
that:
[1.1] non-compliance
with the forms, service and time-periods provided for in the rules of
Court in accordance with the provision
of rule 6(12) (a) is condoned,
and, the application is dispensed with as one of urgency;
[1.2] pending the
determination of the review application instituted by the applicants
under case number
33291/2019,
the first and
second respondents are interdicted from implementing the contract
entered into between them for the supply of fire
engines and water
trucks pursuant to the award of the tender initiated by the first
respondent on 17 May 2019;
[1.3] the applicants
shall forthwith approach the office of the Deputy Judge President for
an expedited case management and hearing
of the review application
instituted under case number
33291/2019.
[1.4] the costs of the
application are reserved.”
[2]
I set out the reasons below.
[3]
The first and second applicants, Marcé Projects (Pty) Ltd and
Marcè Fire Fighting Technology (“Marcè”),
sought the interim interdict on an urgent basis. The first
respondent, the City of Johannesburg (“the City”)
and the second respondent, TFM Industries (Pty) Ltd (“TFM”)
(“jointly the respondents”), took issue with
the urgency
of the application. They also opposed the application on the merits.
[4]
The review application puts the tendering procedure based on
Regulation 36(1)(a)(i) and (v) of the Municipal Supply Chain
Regulations
2005, which empowers a municipality to adopt a shortened
tendering process in the event of an emergency (“the Regulation
36 procurement process”), under scrutiny. This is the process
which the City contends it adopted when it issued a letter
on 16 May
2019 under the subject “a request for the confirmation of the
availability of fire engine, water tanks” (“the
RFI”),
to a number of targeted prospective tenderers. Marcè is one of
them. Ultimately, the review court will determine
the extent to which
the Regulation 36 procurement process ought to comply with section
217 of the Constitution. This section requires
government entities to
award tenders in accordance with a procurement system which is fair,
equitable, transparent, competitive
and cost-effective.
[5]
Marcè alleges that the subsequent awarding of a tender to TFM
for R582, 991, 957.22 (excluding VAT) is unlawful, unreasonable,
procedurally unfair and inconsistent with the Constitution because
the City failed to follow proper procurement procedures and
to adhere
to the specifications set out in the RFI.
[6]
The City had already concluded a contract with TFM and its
implementation had already commenced when Marcè instituted
the
review application and, subsequently, this application.
[7]
The central issue in this application is whether Marcè, as an
unsuccessful tenderer, has the right to interdict the further
implementation of the tender and whether such an interdict, if
granted, will encroach on the City’s executive functions to
TFM’s prejudice.
BACKGROUND
FACTS
[8]
A report addressed to the City’s Accounting Officer, requesting
him to approve the outcome of the due diligence that the
City
undertook with Original Equipment Manufacturers (“OEMS”)
in South Africa, and the deviation in terms of Regulation
36(1)(a)(i)
and (v) of the Municipal Supply Chain Regulations, to appoint TFM for
the red fleet contract (“the Regulation
36 Report”),
elucidates the background facts. It is attached to Marcè’s
and the City’s papers in this
application. Marcè
contends that it obtained it from the Mail and Guardian website on 12
July 2019, the day the Mail and
Guardian published an article
concerning the awarding of the tender to TFM. The respondents do not
dispute its authenticity. The
City rather accused Marcè of
obtaining it illegally and has threatened to prosecute it.
[9]
The genesis of the dispute between the parties is an invitation to
bid, the City published on 18 September 2018 under bid number
A781,
calling for proposals for the supply, delivery, maintenance and
support services for the red fleet for a period of three
years (“Bid
A781”).
[10]
The bid closed on 2 November 2018. The Marcè entities did not
tender for Bid A781 as separate entities. They did so
as part of a
group of entities called the Moipone Consortium.
[11]
The bid was subsequently evaluated by the City’s Bid Evaluation
Committee (“BEC”) and the Executive Adjudication
Committee (“EAC”). From the Regulation 36 Report, it
appears that on 26 February 2019, the EAC recommended to the
Accounting Officer that the tender be awarded to Fleet Africa, Super
Group, for R19, 577, 476.80 excluding VAT, fuel, tolls, services
and
repair costs.
[12]
The report further states that on 13 March 2019, the City received a
letter from Tallis Fleet, who was the preferred bidder
for A781,
withdrawing its tender. It is unclear from the report how Tallis
Fleet became the preferred bidder given the EAC recommendation
to
award the tender to Fleet Africa, Super Group. It appears that
subsequent to Tallis Fleet’s withdrawal, the tender could
not
be awarded to Fleet Africa, Super Group as its bid did not include
all the required services. It is also unclear from the Regulation
36
Report how Fleet Africa, Super Group, was recommended given this
shortcoming.
[13]
On 28 February 2019, one of the tenderers, Bidvest, addressed a
letter to the City raising concerns regarding the intended
awarding
of the tender as recommended by the EAC. It placed the City on terms
not to award the tender until its concerns were addressed.
Subsequently, its attorneys addressed two letters to the City, making
allegations regarding irregularities in the awarding of Bid
A781 and
threatened an urgent judicial review. It does not seem that it
executed this threat.
[14]
The Regulation 36 Report is silent on the City’s response to
these letters.
[15]
Subsequently, at a meeting between various units within the City’s
establishment, a recommendation was made that Bid
A781 be cancelled,
and that a new bid excluding certain items with a pricing structure
be introduced. Following this meeting, the
EAC met to consider the
withdrawal of the Tallis bid and referred the bid to the BEC for
consideration. Marcè disputes that
the recommendation was
approved and acted upon. It contends that Bid A781 was still pending
when the City issued the RFI on 16
May 2019. I need not resolve this
dispute for the purpose of the present application.
[16]
The Regulation 36 Report notes that the Tallis Fleet’s
withdrawal of its bid placed the City in a precarious position
and
increased the risk of managing fires within the City beyond
acceptable levels. This placed the City at the risk of failing
to
deliver and fulfil its constitutional mandate of providing efficient
and effective emergency management services to the citizens
of the
City of Johannesburg. The report also notes that the available fire
rescue vehicles break down daily, costing the City a
substantial
amount of money to repair and maintain. As a result of the
breakdowns, the City is unable to respond adequately to
callouts. It
will take 8 to 12 months from ordering to delivery of the vehicles.
[17]
It is for that reason that a due diligence exercise was conducted
with OEMs in South Africa to establish the availability of
the
vehicles on the South African market. The RFI was issued as part of
this exercise. It is this due diligence exercise that culminated
in
the production of the Regulation 36 Report, and the awarding of the
tender to TFM.
[18]
Although the Regulation 36 Report further states that the
specifications for Bid A781 were used for this exercise with a view
to securing approval for the procurement of the vehicles from the
Accounting Officer, it appears that the RFI contained a new
requirement namely; that the OEMs ought to have the required vehicles
on rubber, available for inspection by City officials on 48
hours’
notice.
[19]
The RFI only gave the targeted OEMs 48 hours to respond. Marcè,
TFM and several other targeted OEMs responded.
[20]
Out of the entities that responded to the RFI, only TFM and Fire
Raiders indicated that they had vehicles. Fire Raiders indicated
that
it only had one vehicle. TFM indicated that it could deliver all the
specified vehicles within 10 weeks from placing an order.
It also
provided pricing for each vehicle, inclusive of the equipment to be
installed to ensure that the vehicles are operational.
It would
provide the vehicles and the required services for the aforesaid
amount. Pursuant to these responses, two City officials
visited TFM
premises for a site inspection. The Regulation 36 Report is silent on
their findings. Marcè contends that
during the
inspection, TFM had no vehicles on rubber and therefore did not meet
the RFI requirements. TFM and the City dispute
this allegation.
Again, it is for the review court to resolve this dispute.
[21]
On 5 July 2019, the City awarded the tender to TFM. As already
stated, Marcè learnt about this development from an article
published in the Mail and Guardian newspaper on 12 July 2019. It had
received no communication from the City regarding the outcome
of its
response to the RFI. Marcè subsequently addressed a request to
the City to meet to discuss the process followed to
award the tender
to TFM.
[22]
On 22 July
2019, Marcè sought information from the City in relation to
Bid A781 and the RFI in order to prepare for the proposed
meeting.
Having received no response from the City, on 24 July 2019 it
addressed a request in terms of the Promotion of Access
to
Information Act
[1]
(“PAIA
request”) to the City in relation to the same information. It
ultimately met with the City on 26 July 2019,
having not received the
requested information. It does not appear that this meeting yielded
Marcè’s expectations.
By the end of July 2019, the City
informed Marcè that it would not reconsider its decision to
award the tender to TFM.
[23]
On 20 September 2019, Marcè instituted the review application.
On 27 September 2019, it instituted the present application.
ISSUES
TO BE DETERMINED
[24]
The following issues arose between the parties:
[24.1] whether
Marcè has
locus standi
to bring this application;
[24.2] whether
Marcè meets the test to get an audience in the urgent court;
[24.1] whether
Marcè makes out a case for the interim interdict to be
granted.
LOCUS
STANDI
[25]
Relying on
Westinghouse
Constitutional Court
[2]
,
the City contended that Marcè lacks
locus
standi
because it did not bid for Bid A781, but was part of the Moipone
Consortium bid.
[26]
Westinghouse
sought to impugn the awarding of a tender to the successful bidder,
Areva by Eskom. It was successful in the High Court.
Avera and Eskom
successfully appealed to the SCA.
[3]
Westinghouse further appealed to the Constitutional Court. One of the
issues that arose in both the High Court and the SCA is whether
Westinghouse has legal standing to impugn the tender. Both courts
held that it did. The Constitutional Court found that it did
not.
[27]
The City’s reliance on
Westinghouse Constitutional Court
,
to impugn Marcè’s
locus standi
is misplaced as
the facts between the two cases are materially distinguishable for
two reasons:
[27.1] Westinghouse
tendered as an agent of Westinghouse Electric Company LLC
(“Westinghouse USA”);
[27.2] the contract
under review is not Bid A781 but the contract awarded pursuant to the
RFI.
[28]
Legally, an agent and a member of a consortium, stand on completely
different footing in relation to whether they have an interest
in the
proceedings. As an agent, Westinghouse could not have submitted the
bid in its own right. Therefore, it had no interest
in the outcome in
its own right. When tendering as a consortium, the consortium has an
interest in the outcome of the tender. However,
this is not a
distinction that should detain this court further, because, as I have
stated above, the contract under review is
not Bid A781, but, the
contract awarded pursuant to the RFI.
[29]
Although
Marcè did not bid for Bid A781 as an individual entity, the
City solicited its bid for the contract under review.
Therefore on
the interpretation of standing under both the common law and section
38
[4]
of the Constitution, Marcè
as a bidder does have standing to impugn the awarding of the tender
to TFM.
[30]
Therefore the City’s
locus standi
point is dismissed.
URGENCY
[31]
The first hurdle that the applicant had to meet to succeed in the
interim relief that he sought, relates to urgency.
[32]
Rule 6 (12) of the Uniform Rules of Court provides for the abridgment
of the times for the service and filing of process and
documents
prescribed by the Uniform Rules of Court, and the departure from the
established sitting times of the court. The rule
provides:
“
6(12) (a) In
urgent applications the court or a judge may dispense with the forms
and service provided for in these rules
and may dispose of such
matter at such time and place and in such manner and in accordance
with such procedure (which shall as
far as practicable be in terms of
these rules) as it deems fit.
(b)
In
every affidavit or petition filed in support of any application under
paragraph (a) of this subrule, the applicant
must set forth
explicitly the circumstances which is averred render the matter
urgent and the reasons why the applicant claims
that applicant could
not be afforded substantial redress at a hearing in due course.”
[33]
To qualify for an audience in the urgent court, there is a test that
an applicant has to meet, emanating from Rule 6 (12).
I deal with it
below. Where a matter lacks urgency, the court may, for that reason
alone, strike the application from the roll.
[34]
Concerning the procedure in Rule 6 (12),
Notshe
AJ stated as follows in
East Rock
Trading 7
:
“
[6]
The import thereof is that the procedure set out in rule 6(12) is not
there for the taking. An Applicant has to set forth explicitly
the
circumstances which he avers render the matter urgent. More
importantly, the Applicant must state the reasons why he claims
that
he cannot be afforded substantial redress at a hearing in due course.
The question of whether a matter is sufficiently
urgent to be
enrolled and heard as an urgent application is underpinned by the
issue of absence of substantial redress in an application
in due
course. The rules allow the court to come to the assistance of a
litigant because if the latter were to wait for the normal
course
laid down by the rules it will not obtain substantial redress.”
[5]
[35]
Thus, the test for urgency when an audience is sought in the urgent
court is two-fold:
35.1 whether the
applicant brought the application with the requisite degree of
urgency;
35.2 whether, not hearing
the application on the basis of urgency will deny the applicant
substantial redress in due course.
[36]
In
Mogalakwena
Local Municipality
[6]
the court set out the general approach to determining urgency in
urgent applications. It stated that an evaluation ought to be
undertaken by an analysis of the applicant’s case, taken
together with allegations by the respondent which the applicant
does
not dispute, bearing in mind the general discretion that the court
has in such applications in terms of Rule 6 (12). I followed
this
approach when determining the dispute between the parties in respect
of urgency, and, found that Marcè meets both requirements.
Bringing
the application at the first available opportunity
[37]
On the
common cause facts, Marcè did not bring the application
promptly after it learnt on 12 July 2019 that the City awarded
the
tender to TFM. Relying on
Dimension
Data
[7]
,
Marcè justifies the delay on the efforts it took, as set out
above, by requesting information from the City, and attempting
to
avoid litigation by meeting with the City.
[38]
The
respondents contended that this delay is unjustified as Marcè
had all the information it required to bring both the review
application and the application for interim relief. They also
contended that Marcè failed to justify bringing the
application
for the interim interdict a week after launching the
review application. In this regard, TFM relied on
Mhoko
[8]
and
Gallagher
[9]
.
[39]
The City
also cited
Millennium
Waste Management
SCA
[10]
to further peddle this contention. It contended that Marcè
ought to have expected it to promptly contract with the successful
tenderer and implement the tender, particularly because the items
under procurement relate to emergency services.
[40]
Dimension
Data
is
trite authority for justifying the delay to launch an urgent
application while the applicant resorts to measures to avoid
litigation.
In
Millennium
Waste
Management
,
the SCA held that an aggrieved bidder ought to anticipate that after
announcing the awarding of a tender, contracting with the
successful
tenderer and implementation would promptly follow.
[11]
[41]
The facts in
Mhoko
are distinguishable. Mhoko, an unsuccessful
tenderer, sought to challenge the City’s lawful termination of
its month to month
contract, about six months after its tender was
extended on a month to month basis following its termination. In this
period, Mhoko
also unsuccessfully appealed the awarding of the tender
to another tenderer. The conclusion in
Mhoko
, that that the
applicant failed to bring the application at the first availability,
thereby creating its own urgency, cannot be
applied to Marcè
under the present circumstances.
[42]
Gallagher
is also distinguishable because Marcè did not
simply sit back without seeking relief. Further, unlike the applicant
in
Gallagher, Marcè
is also not approaching the court
without a full and proper explanation for its delay.
[43]
By 12 July 2019, Marcè had obtained the Regulation 36 Report.
An analysis of Marcè’s founding affidavits
in both
applications reveals that ultimately this is the information it
relied on to institute the review application and a week
later, the
application for interim relief. By the end of July 2019, it knew that
the City would not reconsider its decision in
respect of the RFI.
[44]
The question arises whether it was necessary for Marcè to wait
for the City to respond to its request for information
to bring this
application which, as I have already alluded to, it only brought a
week after instituting the main application.
[45]
The stance taken by the City to Marcè’s request for
information, perplexes this court. Its lamentation that Marcè
orchestrated the urgency it seeks to rely on, by lying dormant after
it learnt that the award has been made, and that it would
not
reconsider its decision, is deplorable given that it failed to
respond to Marcè’s request for the information
it
required to exercise its rights. Its response to the information
contained in the Regulation 36 Report, which it obtained in
the
public domain was not only intimidating, it thwarted any engagement
on the tender. This conduct by the City renders the present
facts
distinguishable from
Westinghouse
.
[46]
I do not
consider it appropriate to second guess Marcè’s
discomfort with relying primarily on the Regulation 36 to
bring the
applications, especially considering the City’s response to
Marcè’s quest to obtain information and
to engage on the
tender. Marcè apparently did not have all the information it
required to exercise its rights. Hence, its
version is speculative in
some respects. The grounds of review surmmarised in paragraphs 70.3.4
and 70.3.6 of this judgment and
the respondents’ answer to
these grounds illustrate this point. Further, Marcè may not
have pleaded certain issues
that bolster its challenge because it was
not aware of their existence.
[12]
[47]
Furthermore, some of Marcè’s grounds of review, when
read in light of the respondents’ versions as set out
in their
answering affidavits, indicate that even with the information
contained in the Regulation 36 Report, it clutched at straws
to
understand the process followed to award the tender, its correlation
to Bid 781, the criteria used to evaluate the RFI and the
basis on
which the tender was awarded to TFM. TFM’s version on the
questions Marcè raises in respect of some of these
issues, as
well as its response to the RFI, indicates that it too probably did
not have the same comprehension as the City in respect
of the RFI
process and its correlation to Bid A781.
[48]
The record that the City has filed in the review application as
required in terms of Rule 53 consists of several arch lever
files.
When compared to the Regulation 36 report by sheer size, the latter
document only contains scant information on the RFI.
It does not
include the responses of the other targeted OEMs. It only sets out
summaries of their responses. It also does not include
documents that
are part of Bid A781.
[49]
The corollary to an unsuccessful tenderer’s duty to promptly
impugn the awarding of a tender, is the duty upon the contracting
government entity to promptly engage with it and to accede to its
requests for information. Where the City fails in this duty,
it is
dissembling of the City to contend that the unsuccessful tenderer
should not be given an audience in the urgent court because
it
delayed to approach the court.
[50]
For its tardiness in responding to Marcè’s request for
information, the City ought not to benefit from Marcè’s
delay in bringing the application by having it struck from the roll.
It only responded to Marcè after it instituted the
application, declining Marcè’s PAIA request. Yet it
subsequently filed the information as required by Rule 53 (1).
[51]
The City’s stance taken at the 26 July 2019 meeting, which
thwarted meaningful engagement on the bid, coupled with its
delay in
responding to Marcè’s request for information was
unreasonable. It placed Marcè in a precarious
position
by frustrating Marcè’s efforts to engage with the tender
process. Hence, Marcè was also in the dark
regarding the
implementation of the contract, until the City’s Mayor Herman
Mashaba tweeted this information on 23 September
2019.
[52]
That
customarily, in review applications, an applicant has the right to
supplement its founding affidavit after the Rule 53(1) record
is
filed, does not justify penalizing Marcè for delaying to bring
the applications under the present circumstances. Rule
53(1) was
proclaimed prior to the advent of PAIA. 53(1) and PAIA have different
objectives. Rule 53 (1) obliges a decision maker
to file a record
relating to the impugned decision. The record enables the applicant
and the court to fully and properly assess
the lawfulness of the
decision making process. It allows an applicant to
interrogate the decision and, if necessary,
to amend its notice of
motion and supplement its grounds for review. On the other hand, PAIA
affords any person, subject to certain
statutory limitations, the
right of access to any information held by the state, which it
requires to exercise its rights. While
reasons for the refusal of
Marcè’s PAIA request are not before this court, notably,
the City does not assert the applicability
of any statutory
limitation to the PAIA request. Where a PAIA request is
denied, an applicant is hampered in the formulation
and prosecution
of case.
[13]
[53]
Penalizing Marcè for the delay under these circumstances would
send an undesirable message to bearers of information,
that they may
disregard the objectives of PAIA by denying a requester’s
efforts to obtain information and invariably, frustrate
its efforts
to exercise its rights.
[54]
Under the present circumstances, I find that Marcè’s
delay in bringing this application is justified.
[55]
In any event, the ultimate test on urgency is whether, if not given
an audience in the urgent court, the applicant will be
denied
substantive redress in due course. To this requirement I now turn.
Substantive
redress in due course
[56]
It is trite
that upon the successful review of a tender, courts have a wide
discretion to order a multi-dimensional just and equitable
relief in
terms of section 172 (2) of the Constitution, taking into account the
primacy of the public interest against the rights,
responsibilities
and obligations of all the affected parties.
[14]
Therefore, determining whether an applicant meets the substantial
redress in due course requirement should not be considered from
the
narrow perspective of the relief that an applicant seeks.
[57]
It has to
be determined from the multi-dimensional perspective of the nature
that section 172 (2) calls for, to circumvent, to the
extent
possible, the practical difficulties that will face the reviewing
court in the event that it sets the impugned tender aside.
To this
the court in
Pikoli
[15]
,
relied on by
Marcè,
alluded when it said:
[57.1] one of the main
aims of an interim interdict is to preserve the status
quo
pending the final determination of the rights of parties to pending
litigation;
[57.2] the law requires
of all concerned to respect the pending legal process and, as far as
is reasonably possible, to limit the
practical consequences of the
challenged action. Therefore, in appropriate circumstances, a
litigant should halt its actions if
it is aware that those actions
are being challenged and that failure to do so may even result in
liability for contempt of court;
[57.3] when considering
whether to grant or refuse an interim interdict, the court seeks to
ensure, as far as is reasonably possible,
that the party who is
ultimately successful will receive adequate and effective relief.
[58]
Both the City and TFM contend that the review application will give
Marcè substantial redress in due course subject
to the court’s
remedial discretion, but for different reasons, with which I
disagree.
[59]
TFM contends that other litigants have found themselves in this
position. There is nothing peculiar about the position that
Marcè
finds itself in.
[60]
The City reprobates and approbates on whether Marcè will not
have substantial redress in due course if the application
is not
heard urgently. On the one hand, it contends that the review court is
entitled to grant just and equitable relief that does
not require the
restoration of the status
quo
by ordering the City to re-run
the tender process anew. On the other hand, it contends that in the
event that the reviewing court
orders a re-run, Marcè will
obtain the substantial redress of the kind it seeks in due course, as
it will have the opportunity
to participate in a fair and lawful
tender process. Yet it also argues that there is nothing to interdict
as the tender had been
partially implemented with 17 vehicles having
been delivered by 20 September 2019.
[61]
The City seeks to procure 92 vehicles under the RFI. With 17 having
been delivered by the time the review application was launched,
and
30 more in an advanced state of manufacturing, the tender has only
been partially implemented. These circumstances are ideal
to keep the
status
quo
constant, to enable the reviewing court to set
aside the tender from the day of the order, or any subsequent date,
in the event
it find that it was awarded unlawfully. Such an order
would promote the lawful, fair, equitable and competitive procurement
right
that Marcè asserts, while protecting the interest the
public has in lawful procurement processes, which includes the
efficient
use of scarce public resources. Such an order would be
completely out of question if the tender is implemented further.
[62]
On a tender valued for R582,991,957.22, the prospective loss to the
state that could be prevented by halting the further implementation
of the tender is substantial. It enhances Marcè’s
argument for the absence of substantial redress in due course.
[63]
As argued by counsel for Marcè, any negative consequences will
be offset by the expedited hearing of the review application,
with
court ordered timelines for the filing of papers in that application.
These measures are in place. Marcè promptly requested
the
Deputy Judge President to place the review application under judicial
case management as ordered in the interim order. The
Deputy Judge
President has appointed me as the case manager. I have held the first
case management meeting with the parties during
which timelines for
the filing of papers in the review was agreed. The provisional date
of hearing in February 2020 has been sent
to the office of the Deputy
Judge President for allocation.
[64]
The City’s fire response capacity has been tremendously
enhanced by the delivery of 17 vehicles, compared to where it
was
prior to the award of the tender. This addresses the public interest
considerations in relation to negative consequences that
the
interdict might create.
[65]
I found that not hearing Marcè on an urgent basis under
circumstances where the tender is only partially implemented,
will
unjustly limit the just and equitable relief that the court would
grant to effectively vindicate infringed rights and protect
the
public interest in the event that the tender is found to have been
unlawfully awarded and is set aside.
REQUIREMENTS
FOR AN INTERIM INTERDICT
[66]
It is trite that an applicant for an interim interdict to be
successful, it ought to meet the following requirements according
to
the well-known 1914 judgment in
Setlogelo v Setlogelo:
[66.1] the existence of a
prima facie
right;
[66.2] a well-grounded
apprehension of irreparable harm if the interim relief is not granted
(and the ultimate relief is granted);
[66.3] the balance of
convenience favours the granting of the interdict;
[66.4] the absence of a
suitable alternative remedy.
[67]
Concerning the application of this test in a constitutional
dispensation, the Constitutional Court in
OUTA
said:
“
The Setlogelo test,
as adapted by case law, continues to be a handy and ready guide to
the bench and practitioners alike
in the grant of interdicts in busy
magistrates' courts and high courts. However, now the test must be
applied cognisant of the
normative scheme and democratic principles
that underpin our Constitution. This means that when a
court considers whether
to grant an interim interdict it must do so
in a way that promotes the objects, spirit and purport of the
Constitution.”
[16]
[68]
Therefore, the refined test for an interim interdict of the
nature Marcè seeks is as follows:
[68.1] an interim
interdict restraining the exercise of statutory powers is not an
ordinary interdict;
[68.2] c
ourts
grant it only in exceptional cases and when a strong case for that
relief has been made out
.
[17]
[69]
Guided by the approach the Constitutional Court adopted in
OUTA
, I did not traverse the merits of the review at this
stage, lest I, without the benefit of the full record, which might
necessitate
the filling of supplementary affidavits, inappropriately
traverse the purview of the review court. I considered
the
issues in the review for the restricted purpose of determining
whether Marcè makes out a strong case for the interim
interdict to be granted.
[70]
Marcè seeks the awarding of the
tender to TFM reviewed and set aside on the basis that it is
irregular, unlawful and unconstitutional.
It relies on the following
grounds of review:
[70.1]
non-compliance with section 217 of the Constitution and other
applicable legislative prescripts;
[70.2] having never
before manufactured and delivered fire trucks in South Africa, TFM
should not have been selected;
[70.3] there was no
basis to adopt the deviation procedure to award the tender as:
[70.3.1]
there was already a structured tender process under way;
[70.3.2]
there was no emergency justifying the deviation;
[70.3.3]
TFM has not delivered the vehicles as required in terms of the RFI;
[70.3.4]
TFM did not meet the specifications as set out in the RFI in that it
did not provide:
(a) the confirmation of
the vehicles sought with pricing;
(b) motor vehicles which
were on rubber and could be inspected within 48 hours;
(c) motor vehicles that
meet the local content requirements prescribed by the DTI.
[70.3.5]
TFM’s appointment is unprocedural, irrational and unreasonable
in that Marcè was not afforded the same opportunity
to submit
a tender that did not meet all the specified requirements;
[70.3.6]
contrary to what was stated in the RFP, the City paid an upfront
payment to TFM.
[71]
I found that the application meets the requirements for an
interim interdict on the basis of the refined test in
OUTA
,
hence the order granted on 18 November 2019.
The
existence of a prima facie right
[72]
The right that Marcè asserts in this application is the
right to participate in a lawful, fair, reasonable and transparent
procurement process. It does not contend that it is entitled to have
the award made to it. It contends that due to the irregularities
that
it has identified in the process followed by the City when awarding
the tender to TFM, it has been stripped of this right
in that the
awarding of the tender to TFM under those circumstances was unlawful.
[73]
Relying on
OUTA
, the respondents contended that Marcè
lacked the right to seek interdictory relief.
[74]
The
City disagrees that Marcè was stripped of its right to
participate in a lawful, fair and transparent procurement process.
It
contends that Marcè was afforded an opportunity to participate
in the RFI and did not, when it so participated, complain
that the
process is irregular. It failed to meet the City’s requirements
in that it had no vehicles on rubber, did not provide
pricing and did
not meet the DTI local content requirement, hence it was disqualified
and the City did not engage with it further.
Therefore, Marcè
has nothing to protect by way of interim relief, without which
irreparable harm would ensue if the interdict
is not granted. Marcè
does not require the interdict to protect its fair process rights,
therefore it has failed to prove
a
prima
facie
right in the sense contemplated in
OUTA
[18]
.
[75]
Section 217 of the Constitution is the foundational provision
applicable in all procurement processes. It requires all other
procurement
legislation, regulations and policies to be implemented
in accordance with a procurement system that is fair, equitable,
transparent,
competitive and cost effective.
[76]
Marcè could not complain that the tender process was
irregular when it received the RFI or when it responded to it because
it had no information at that stage to formulate such a view. The
first inclination it formulated in relation to the alleged
irregularities
is when it obtained the Regulation 36 Report on 12
July 2019. By then, not only was it already part of the RFI, a
decision in respect
of the RFI had been made.
[77]
OUTA
is distinguishable from the present facts.
OUTA
does
not limit the
locus standi
of an applicant who seeks to
interdict the implementation of a tender pending a review to a
tenderer who contends that the bid was
wrongly awarded to the
successful tenderer in that it ought to have been awarded to it.
[78]
In
OUTA
,
the Constitutional Court set aside the interim interdict granted by
the High Court on the basis that the impugned decisions fell
within
the framework of government policy. It was not the applicant’s
case in
OUTA
that the impugned decisions were taken unlawfully. The applicant
sought to impugn the decisions on the sole basis that the costs
of
collecting e-tolls are unreasonably high and irrational. Hence, the
Constitutional Court found that preventing the implementation
of the
decision under those circumstances will offend the doctrine of
separation of powers.
[79]
Here, Marcè contends that the
impugned decision is unlawful as it was implemented contrary to the
section 217 of the Constitution.
No organ of state may use the veil
afforded to it by the doctrine of separation of powers to implement a
decision that was allegedly
taken unlawfully. Therefore, the City’s
reliance on
OUTA
under these circumstances is misplaced.
[80]
In
Tasima
, the Constitutional Court observed that
section 217 seeks to protect scarce public resources. It went further
to say, once those
charged with the responsibility to procure public
goods start operating outside the ambit of this section, corruption
thrives.
In
casu
, while Marcè does not allege that the
tender is tainted with corruption, the allegations of irregularities
it makes in this
application, even in the absence of corruption, if
found to have occurred, will demonstrate a failure to protect public
resources
within the ambit of section 217.
[81]
Where the impugned decision relates to the use of public
resources by authorities charged with the responsibility to protect
them,
limiting the
prima facie
right requirement as envisaged
in
Setlogelo
to the rights of the applicant before court would
not give effective meaning to section 217. The broader public
interest in the
lawful procurement processes, which includes the
effective use of public resources has to be taken into account when
assessing
the need for an interdict.
[82]
In
casu
, a clear public interest to protect public
funds exists. As already mentioned, on 26 February 2019, the EAC
recommended to the
Accounting Officer that the tender be awarded to
Fleet Africa, Super Group, for R19, 577, 476.80 excluding VAT, fuel,
tolls, services
and repair costs. Tallis subsequently became the
preferred bidder. It had bid for R132,837,306.51. TFM tendered for
R91, 360,498.04.
At that stage, although it was the lowest bidder, it
was never recommended for the tender. The procurement of the same
goods was
subsequently effected through the RFI, leading to the
awarding of the tender to TFM in July 2019 for R582, 991, 957.22
(excluding
VAT). Notably, seemingly equivalent to the Fleet Africa,
Super Group offer, TFM will only provide vehicles and equipment under
the present tender. The substantial difference between the Fleet
Africa, Super Group offer and TFM’s offer in Bid A781 on
the
one hand, and the amount TFM was awarded the tender for pursuant to
the RFI on the other hand raises serious questions about
the basis
for awarding the tender to TFM as well as the effective use of public
resources. These issues stand to be determined
in the review.
[83]
Therefore, Marcè has successfully
established two clear rights worthy of protection, namely:
[83.1]
its right as a tenderer to participate in a tender process that
complies with section 217;
[83.2]
the public interest in the procurement process, which includes the
protection of scarce public resources.
A
well-grounded apprehension of irreparable harm
[84]
Marcè
must show a reasonable apprehension of irreparable harm if the relief
is not granted.
[19]
Irreparable implies that the effects of the harm could not be
reversed. The harm must also be anticipated and ongoing.
[20]
[85]
The harm to be prevented in the present circumstances is the
continued implementation of a tender in the event that the review
court
finds it to have been unlawfully awarded and the risk it places
on the integrity of the review process. If the interdict is not
awarded, the continued implementation of the tender will render the
review academic as it will limit the just and equitable relief
that
the court may award. The review court is unlikely to set aside the
tender and contract concluded pursuant thereto retrospectively,
as
doing so will require the return of the vehicles that have been
delivered and the return of funds paid. Such an order will be
impractical, as it will not restore the parties to their respective
positions before the award was made.
[86]
Awarding the interdict on the other hand, will prevent further
implementation of the contract, thereby preserving the practical
effect of the just and equitable relief that the reviewing court may
award. This will make setting aside the award from the date
of the
interdict or any other subsequent date as determined by the reviewing
court possible. The relief may include a re-run of
the tender in
respect of the remaining vehicles, thereby promoting the right to
participate in a lawful, fair, equitable, competitive
and just
tendering process which Marcè seeks to assert in the review.
It will also prevent significant financial loss to
the fiscus as a
substantial amount of funds are yet to be employed.
[87]
Interdicting
the further implementation of the tender does not offend the
principle of separation of powers under the present circumstances,
because in the review Marcè is not asking the court to usurp
or to interfere with the exercise of the City’s executive
powers within the framework of the Constitution, the law or
government policy. The doctrine of separation of powers does not
provide
for a total separation of the three arms of government. It
also does not sanction the unfettered exercise of power by the three
arms of government. It operates subject to a system of checks and
balances.
[21]
[88]
The
decision Marcè seeks to impugn in the review is consistent
with the principle of separation of powers. An organ of state
is only
entitled to act to the extent it is empowered by the Constitution,
the law and government policy. The constitutional principle
of
legality requires organs of state to act lawfully and within the
boundaries of the Constitution.
[22]
Where an organ of state acts beyond its constitutional and statutory
authority, it is precisely the function of the court to prevent
such
action. Under such circumstances, judicial intervention is consistent
with the doctrine of separation of powers.
The
balance of convenience
[89]
It is trite that this requirement
involves the balancing of competing interests in respect of the harm
the respondents would suffer
if the interdict is granted and that
which the applicant would suffer if it is not granted.
[90]
Save for stating that 30 vehicles
scheduled for delivery on 30 November 2019 are in advanced stage of
manufacturing, TFM has not
placed facts before the court in relation
to the prejudice it will suffer if the interdict is granted.
The log jam created
by the interdict will not be long given the
prospects of an expedited hearing of the review application,
alleviating any prejudice
that TFM is likely to suffer.
[91]
The public interest straddles the two
competing interests. On the one hand, the vehicles under procurements
are intended to enhance
the City’s fire fighting capacity. On
the other hand, the City has an obligation to protect scarce public
resources by procuring
goods and services through a lawful, fair,
equitable and competitive tender process.
[92]
The City’s diminished
fire-fighting capacity and its inability to respond adequately to
fire hazards, thereby saving property
and lives is used as an
emergency to justify embarking on a truncated tender process in terms
of Regulation 36. When the Regulation
36 report was prepared, a
projection was made that it is desirable to increase the City’s
fire fighting particularly because
the winter months are fire prone.
This projection does not hold for the summer months.
[93]
Although granting the interdict is not
convenient for the City for the reasons already stated, the delivery
of 17 vehicles on 20
September 2019 probably enhanced the City’s
fire response capacity from its pre-Bid A781 state. The City’s
increased
fire-fighting capacity tilts the scale of convenience in
favour of awarding the interdict.
[94]
The public interest in the protection of
scarce public resources is undermined when tenders are awarded
unlawfully given the inherent
risk of cost ineffective procurement in
such instances. The prospect of saving significant financial loss to
the City occasioned
by an unlawfully awarded tender tilts the scale
of convenience in favour of awarding the interim interdict.
The
absence of a suitable, alternative remedy
[95]
The mootness of a review process once
the tender is fully implemented, satisfies this requirement. Not
granting the interdict will
annihilate any suitable remedy that the
review court may consider to be just and equitable.
INTERESTED
PARTIES
[96]
Marcè acknowledges the interest
of the other tenderers in these proceedings; hence it intends joining
them in the review.
It also intends issuing a section 16A notice due
to the constitutional nature of the relief that it seeks in the
review.
[97]
The
substantial public interest in this matter due to the considerable
financial loss to the fiscus if the tender is found to be
awarded
unlawfully, warrants a proper representation of the public interest
in these proceedings. It is for that reason that I
grant an order
below, inviting organizations that protect such interests in matters
such as these, to intervene in order to represent
the public interest
not only in the review, put also in the application in terms of
section 18 (2) and (3) of the Superior Court’s
Act
[23]
which TFM instituted on 10 December 2019.
[98]
The respondents are eager to have the
section 18 (2) and (3) application heard. Such an application is
inherently urgent. Its urgency
renders the Rule 16A process nugatory.
[99]
Parties external to the state apparatus
face serious impediments when they seek to address alleged
irregularities in the exercise
of executive functions. The
limitations that Marcè encountered when seeking to obtain
information from the City and to engage
with it on its decision to
award the tender to TFM, bears testament to this proposition.
State entities tasked with addressing
such allegations may be better
placed for this task as they are equipped with appropriate statutory
powers. Notably, the City is
already subject to the attention of such
an entity in relation to procurement activities for amongst others,
its firefighting component.
[100]
On
29 March 2019, President Cyril Ramaphosa published proclamation No
R.17 of 2019
[24]
referring it
for investigation, the procurement and contracting for several goods
and services by the City of Johannesburg to the
Special Investigating
Unit in terms of section 2 (1) of the Special Investigating Units and
Special Tribunals Act.
[25]
He
made the referral on the basis that allegations contemplated in
section 2(2) of the said Act have been made in relation to the
affairs of the City of Johannesburg. Section 2 (2) provides:
“
(2)
The President may exercise the powers under subsection (1) on the
grounds of any alleged-
(a)
serious maladministration in connection with the affairs of any State
institution;
(b)
improper or unlawful conduct by employees of any State institution;
(c)
unlawful appropriation or expenditure of public money or property;
(d)
unlawful, irregular or unapproved acquisitive act, transaction,
measure or practice having a bearing upon State property;
(e)
intentional or negligent loss of public money or damage to public
property;
(f)
offence referred to in Part 1 to 4, or section 17, 20 or 21 (in so
far as it relates to the aforementioned offences) of Chapter
2 of the
Prevention and Combating of Corrupt Activities Act, 2004
, and which
offences was [sic] committed in connection with the affairs of any
State institution; or
[Para. (f) substituted
by
s. 36
(1) of Act 12 of 2004 (wef 27 April
2004).]
(g)
unlawful or improper conduct by any person which has caused or may
cause serious harm to the interests of the public or any
category
thereof.
[101]
As envisaged in section 2 (3) of the
Act, the proclamation sets out terms of reference for the
investigation. Notably, the award
of a tender for vehicles and
vehicle maintenance services from an entity called Fire Riders (Pty)
Ltd and repairs and maintenance
work at fire stations is included in
a schedule to the proclamation. The inclusion of these awards in the
terms of reference as
well as the papers before court implicates the
awarding of tenders in relation to the firefighting component of the
City in controversy
for quite some time. The allegations that
Marcè makes against the City in the review application
indicates that the
controversy has continued beyond the publication
of the proclamation.
[102]
The terms of reference are extended to
activities that took place after the publication of the award but
relevant to, connected
with, incidental or ancillary to matters
mentioned in the Schedule, or involve the same persons, entities or
contracts investigated
under authority of the proclamation.
[103]
While the Schedule specifies areas of
investigation, it also includes ‘any related unauthorised,
irregular or fruitless and
wasteful expenditure incurred by, or
losses suffered by, the Municipality or the State.
[104]
In terms of section 2(4) The President
may at any time amend a proclamation issued by him.
[105]
In the premises, I consider it
appropriate to refer this judgment to the Special Investigating Unit
for noting and where deemed
appropriate, for action as mandated
either by the above proclamation or by the Act.
[106]
In the premises the following order is
made:
ORDER
1.
The order granted on 18 November 2019 is
confirmed.
2.
The Registrar of this Court is directed
to:
2.1
identify organizations that represent
the public interest in procurement matters, and send them this
judgment in order to consider
intervening in these proceedings in the
public interest;
2.2
send this judgment to the Head of the
Special Investigating Unit for noting and for any action deemed
appropriate within its statutory
mandate;
2.3
upload the papers in the application for
review, the application for an interim interdict, the application for
leave to appeal and
the application in terms of section 18 (2) and
(3), for easy access by the organizations referred to above.
3.
All the parties shall upload any further
papers in all proceedings brought under the above case number on
caselines and notify the
other parties as well as my Clerk of such
action by email.
__________________________
MADAM
JUSTICE
L T MODIBA
JUDGE
OF THE HIGH COURT,
GAUTENG LOCAL
DIVISION, JOHANNESBURG
APPEARENCES
Counsel
for applicants: Advocate K Pillay SC assisted by
Advocate
Y Ntloko
Attorney
for applicants: Dlamini Attorneys
Counsel
for first respondent: Advocate M Sello assisted by
Advocate
M Seape
Attorney
for first respondent: Mkhabela Huntley Attorneys Inc.
Counsel
for second respondent: Advocate L Hollander
Attorney
for second respondent: Thomson Wilks Inc.
Date
of hearing: 12, 14 November 2019
Date
of granting order: 18 November 2019
Date
reasons were furnished: 17 December 2019
[1]
Act 2 of 2000
[2]
Areva
NP Incorporated in France v Eskom Holdings Soc Limited and Others
(2017 (6) SA 621 (CC)
[3]
Westinghouse
Electric
Belgium Société Anonyme v Eskom Holdings (SOC) Ltd and
another
[2016] 1 All SA 483 (SCA)
[4]
This section provides:
“
38.
Anyone listed in this section has the right to approach a competent
court, alleging that a right in the Bill of Rights has
been
infringed or threatened, and the court may grant appropriate relief,
including a declaration of rights. The persons who
may approach a
court are-
(a) anyone acting in
their own interest;
(b) anyone acting on
behalf of another person who cannot act in their own name;
(c) anyone acting as a
member of, or in the interest of, a group or class of persons;
(d) anyone acting in the
public interest; and
(e) an association
acting in the interest of its members.”
[5]
East
Rock Trading 7 (Pty) Ltd and Another v Eagle Valley Granite (Pty)
Ltd and Others
[2011] ZAGPJHC 196 in paragraph 6
[6]
Mogalakwena
Local Municipality v Provincial Executive Council, Limpopo and
Others
[201]
4 All SA 67
(GP) at paragraphs 64 and 65
[7]
Dimension
Data (Pty) Ltd v Minister of Justice and Constitutional Development
and Another
(25737/2016) [2016] ZAGPPHC 842
[8]
Mhoko
Security Services CC v City of Cape Town
921132/2018)
[2018] ZAWCHC 168
(20 November 2018 Savage J
[9]
Gallagher
v Norman Transport Lines (Pty) Ltd
[10]
Millennium
Waste Management v Chairperson Tender Board
2008 (2) SA 481
(SCA)
[11]
At paragraph 23
[12]
Helen
Suzman Foundation v Judicial Service Commission (Trustees for the
Time Being of the Basic Rights Foundation of South Africa
as amicus
curiae)
2018
(7) BCLR 763
(CC) at paragraph 59.
[13]
Hellen
Suzman Foundation
at paragraph 59.
[14]
AllPay
Consolidated Investment Holdings (Pty) Ltd v CEO, SASSA
2014 (4) SA 179
(CC) at para 33 and 39
[15]
Pikoli
v President of the Republic of South Africa and Others
2010 (1) SA 400
(GNP) at paragraphs 403H to 404A
[16]
At paragraph 45.
[17]
Gool
v Minister of Justice and Another
1955
(2) SA 682
(C)
688F
and 689C and
National
Treasury and Others v Opposition to Urban Tolling Alliance and
Others
(2012 (6) SA 223
(CC)
at
paragraph 43
[18]
At paragraphs 48-50
[19]
Outa at paragraph
[20]
City of
Tshwane Municipality v Afriforum and Another
2016 (6) SA 279
(cc) at para 79.
[21]
Ex
Parte Chairperson of The Constitutional Assembly: In Re
Certification of The Amended Text of The Constitution of The
Republic
of South Africa,
1996
1997
(2) SA 97
(CC); See also
OUTA
at paragraph 44.
[22]
Member
of the Executive Council, Department of Education, Eastern Cape
Province and Another v Eduplanet
(Pty) Ltd (189/17) [2017] ZAECGHC 9 at paragraph 18.
[23]
No 10 of 2013.
[24]
Published in Government Gazette No
42338
of 2019.
[25]
No 74 of 1996.