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[2021] ZAGPJHC 137
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Marce' Projects (Pty) Ltd and Others v The City of Johannesburg Metropolitan Municipality and Others (2019/33291) [2021] ZAGPJHC 137 (29 March 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2019/33291
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
DATE
:
12 April 2021
In
the matter between:
MARCÉ
PROJECTS (PTY)
LTD
First Applicant
MARCÉ
FIREFIGHTING TECHNOLOGIES
(PTY)
LTD
Second Applicant
FIRE
RAIDERS (PTY)
LTD
Third Applicant
And
THE
CITY OF JOHANNESBURG METROPOLITAN
MUNICIPALITY
First Respondent
TFM
INDUSTRIES (PTY)
LTD
Second Respondent
THE
EXECUTIVE MAYOR OF THE CITY OF
JOHANNESBURG
METROPOLITAN
MUNICIPALITY
Third Respondent
JUDGMENT
SIWENDU
J
Introduction
[1]
On
5 July 2019, the first respondent purported to procure 92 fire
engines and rescue vehicles colloquially referred to as ‘the
red fleet’ from the second respondent, TFM Industries (Pty) Ltd
for R582 991 957.22 (excluding VAT) through a deviation
in
terms of Regulation 36(1)(a)(i) and (v) of the Municipal Supply
Chain Management Regulations 2005 (the MSCM Regulations).
[1]
[2]
Following a review application by the
applicants, on 2 June 2020, I declared (1) the tender process, (2)
the decision to award the
tender, and (3) the subsequent contract
between the first respondent and the second respondent unlawful and
constitutionally invalid.
The declaration of invalidity was suspended
pending the determination of a just and equitable remedy.
[3]
This
application concerns a determination of a just and equitable relief
under s 172(1)(b) of the Constitution,
[2]
read with s 8(1) of the Promotion of Administrative Justice Act
3 of 2000 (the PAJA), following the order referred to above.
[4]
The first applicant, Marcé Projects
(Pty) Ltd, is a company incorporated in terms of the laws of the
Republic of South Africa
with its principal place of business at 1012
Ergon Road, Lyttleton Manor, Centurion. The second applicant is Marcé
Firefighting
Technology (Pty) Ltd, a company associated with the
first applicant. Both are collectively referred to as ‘Marcé’
throughout the judgment.
[5]
The
first respondent is the City of Johannesburg Metropolitan
Municipality, a metropolitan municipality as defined by
s 1
of
the
Local Government: Municipal Systems Act 32 of 2000
, with its
principal place of business at 158 Civic Boulevard, Braamfontein,
Johannesburg. It was first represented by Mr Mogashoa,
the Group
Head: Legal and Contracts Department, who deposed to the affidavits
opposing the review application.
[3]
The first respondent will be referred to as ‘the City’
throughout the judgment.
[6]
The
second respondent is TFM Industries (Pty) Ltd (TFM) a private company
whose registered address is at 33 Industry Road, Clayville
Industrial, Olifantsfontein. It is the beneficiary of the unlawful
and constitutionally invalid tender and award. Even though
Marcé sought no relief directly against TFM, save in the event
of opposition, TFM opposed the review application in affidavits
deposed to by Mr Mlonzi (in his capacity as a director of TFM).
[4]
[7]
The third respondent is the Executive Mayor
of the City, Mr Makhubo, who was joined in the proceedings in terms
of this Court’s
order of 18 March 2020.
[8]
Fire Raiders (Pty) Ltd is an intervening
party and the third applicant. It is a private company and a
designer, manufacturer, and
supplier of fire engines and water tanks
conducting its business from 26 Serenade Road, Rustivia, Germiston.
It will be referred
to as ‘Fire Raiders’ throughout the
judgment. On 18 March 2020, following an application, which was not
opposed, I
granted it leave to intervene in the review application.
[9]
Marcé, TFM, and Fire Raiders are
competitors in the fire engine, rescue, and fleet maintenance market.
They are acquainted
with each other’s businesses. They have
jointly and individually conducted business with the City. In 2019,
Marcé
was appointed by the City through a deviation process to
provide breakdown, repair, and roadside assistance for 40 of the
City’s
fire and rescue vehicles for a period of 12 months. In
2018, Fire Raiders supplied five fire engines to the City’s
Emergency
Management Services (EMS) Department. TFM, on the other
hand, was established in 1966 and claims to be the largest
specialised
body builder in Southern Africa, with a diverse product
range as well as relationships with leading international agencies in
waste,
construction, fire, and emergency management services. As
will appear in the judgment, part of the complaint by Fire Raiders
is
that TFM is not an original equipment manufacturer (OEM) of fire
engines, but a well-known manufacturer of waste trucks, and
that it
was not equipped to meet the requirements of the tender awarded to it
by the City.
[10]
I pause to mention that Fire Raiders went
into business rescue at a time when it had a contract (also procured
through a deviation
process) to provide fire engines to the City. It
appears that at some point, TFM engaged with the Business Rescue
Practitioners
of Fire Raiders to acquire the business, but elected
not to due to the input costs required.
[11]
The adjudication of the review application
was preceded by an urgent application launched by Marcé on 29
October 2019 before
Modiba J. Marcé claimed to have obtained
information through social media, Twitter, published by the City on
23 September
2019. The feed reported that the City was about to
“roll-out”, and expected delivery of the fire engines
which were
the subject of the impugned tender process. Expected
delivery was reported as the end of November 2019.
[12]
On 18 November 2019, Marcé
successfully obtained an interdict preserving the status quo. In the
urgent court proceedings,
Mr Mlonzi (on behalf of TFM), rebuffed the
allegations of unlawfulness and irregularity as misguided and false.
Modiba J restrained
and interdicted the City and TFM from executing
and implementing the contract pending this review. TFM sought to
appeal the order
and simultaneously applied under
ss 18(2)
and
(3) of the
Superior Courts Act 10 of 2013
for the suspension of the
operation and execution of the interdict, pending the outcome of its
application for leave to appeal
and a potential petition to the
Supreme Court of Appeal. The City initially also appealed the order,
but withdrew its appeal.
[13]
An expedited allocation of the date
for the hearing of the review resolved the
application
for leave to appeal, as well as the
ss 18(2)
and (3) application,
without a need for their adjudication.
Background
[14]
A detailed background, as well as an
exposition of the nature of the tender irregularities, is essential
in view of the events that
followed the interdict and the
adjudication of the review.
[15]
The procurement of the fire engines has
been marred by allegations of irregularities. The City first embarked
on a procurement process
in 2015 when it sought to acquire 29 new
fire engines. That process terminated in November 2017 amid
allegations of irregularities
involving the appointment of Fire
Raiders. Five fire rescue vehicles were delivered to the City. The
number did not meet the City’s
growing needs which required
services to be rendered to a population of an estimated 4.4 million
people and a geographical area
of 1 645 km².
[16]
On 18 September 2018, the City embarked on
a second tender process, and invited tenders in terms of Bid No. A781
(Bid A781) for
the supply, delivery, and maintenance of specialized
fire and rescue vehicles (the red fleet) for a period of three years.
The
vehicles were bespoke, based on the City’s operational
requirements. Apart from the production (which had to meet the
prescribed
minimum local content requirement) and the supply of the
vehicles, the tender envisaged that the successful bidder would
provide
maintenance and repairs as well as fleet management and
support services, jointly with the City, making the tender and
contract
a lucrative one.
[17]
On 18 October 2018, Marcé submitted
its bid as part of the Moipone Consortium. The City’s Bid
Evaluation Committee
(BEC) tabled its report before the Executive
Adjudication Committee (EAC). I understand from the record filed that
the EAC recommended
a split in the contract, resulting in the award
for the vehicle managed maintenance services and repairs for the
specialised fire
and rescue vehicles to Fleet Africa, a division of
Super Group, for R19 577 476.80. It recommended the Tallis
Fleet Consortium
(Tallis) as the preferred bidder for the
manufacturing and supply of the emergency vehicles.
[18]
Allegations of tender irregularities marred
the recommendation. Bidvest, a tenderer who submitted its bid with
TFM, raised issues
of irregularity and demanded a halt to the
appointment. On 13 March 2019, Tallis withdrew from the tender
process after it was
selected as the preferred bidder. The City
claimed there was no qualified bidder after Tallis. On 26 March 2019,
following a meeting
convened by the EAC and relevant internal
stakeholders, the City issued a press release announcing the
withdrawal of Tallis. The
statement indicates the procurement process
would have to be ‘re-advertised’. Part of the complaint
about the irregularity
of the tender process was whether Bid A781 had
been cancelled.
[19]
On 16 May 2019, the City issued a ‘Request
for confirmation of availability of fire engines, water tanks’
to a selected
group of OEMs under the hand of the City Manager, Dr
Ndivhoniswani Lukhwareni. Marcé, Fire Raiders, and TFM were
amongst
the recipients. They were called to indicate availability of
vehicles which are ‘on rubber and can be delivered
immediately...’
The request provided as follows:
‘
REQUEST
FOR CONFIRMATION OF AVAILABILITY OF FIRE ENGINES, WATER TANKS
The
City of Johannesburg would like to enquire whether Marce Fire
Fighting Technology can supply and deliver the following specialised
fire and rescue vehicles:
Type of
vehicle
Quantity
Heavy duty rescue
unit
2
Industrial
Pumper
2
Heavy Duty Air
truck
4
Telescopic Ariel
Ladder
6
Heavy Duty HAZMAT
vehicle
2
Grass Fire
vehicle
15
Major
Pumper
20
Water
tanker
12
Light Rapid fire and
rescue intervention vehicle
7
Prime
mover
1
Hydraulic
platform
4
Level two incident
command vehicle
2
Heavy Duty rear Mount
Pumper
15
The
request is being made
for vehicles which are on rubber and can be
delivered immediately to the City of Johannesburg once the due
procurement processes
had been approved by the accounting officer.
The
City of Johannesburg hereby requests confirmation of the above
vehicles with your stated price and the delivery date for such
vehicles.
The request is not an undertaking that the City of
Johannesburg will procure any such vehicles from you. Instead it is a
due diligence
process to establish the availability of the
abovementioned vehicles in the South African market.
You
are hereby requested to provide the City of Johannesburg with a
written response by no later than end of business on Monday
the 20
th
of May 2019. Upon receipt of your letter the City of Johannesburg
intends conducting a physical inspection of the vehicles within
48
hours to confirm the availability and specification requirements.
Accordingly, you are requested to indicate the address where
the
vehicles can be viewed.
Your
cooperation in this regard will be greatly appreciated.’
[Emphasis added]
[20]
On
29 May 2019, Mr Jimmy Maluleke (Acting Director of SHELA and FCM:
GCSS) and Mr Sanjay Dubru (Acting Group Head of SHELA and FCM:
GCSS)
conducted an inspection of the TFM plant in Olifantsfontein. Mr
Mlonzi prepared the presentation to the officials. Thereafter,
they,
together with Ms Boitumelo Sago,
[5]
signed a memorandum initiating the permission to deviate in terms of
Regulation 36 of the MSCM Regulations. Part of the justification
for
the deviation was that the City did not expect that the preferred
bidder, Tallis, would withdraw from the tender process. The
City
Manager granted the deviation on 11 June 2019.
[21]
The record reveals that on 18 June 2019,
the EAC met to consider the outcome of ‘the due diligence’
and to approve the
deviation in terms of Regulation 36(1) of the
MSCM Regulations. Even though the request for information was framed
as a ‘due
diligence’ into the availability of the fire
and rescue vehicles, and that the City would decide on a successful
bidder once
the procurement process was approved by the Accounting
Officer, the deviation tabled before the EAC reads thus:
‘
The
purpose of the report is to request the Accounting Officer to:
a.
approve the outcome of the due diligence which was undertaken with
the OEMS in South Africa; and
b.
approve the deviation in terms of Regulation 36(1)(a)(i)&(v) of
the Municipal Supply Chain Regulations to appoint TFM INDUSTRIES
(PTY) LTD for the once off supply and deliver including equipment of
92 specialised fire and rescue vehicles for Emergency Management
Services with an approximate delivery date of the last order not
exceeding three months from signature of the Service Level Agreement
with COJ (sic).’
[22]
On
5 July 2019,
[6]
TFM was
appointed to supply 92 specialised fire and rescue vehicles and
concluded a first Service Level Agreement (SLA) on 19 July
2019. On
8 August 2019, the City issued a press release confirming the
award of the contract to TFM. It is common cause that
the procurement
and negotiation of the contract was conducted by the City’s
Group Corporate and Shared Services Department
(GCSS) to the
exclusion of the end user department, the EMS.
[23]
In her judgment, Modiba J noted that Marcé
did not allege that there was corruption and malfeasance in the award
of the contract
to TFM. She had observed that on 29 March 2019,
the President of the Republic had issued Proclamation No. R 17
of 2019,
referring the procurement and contracting for several goods
and services by the City to the Special Investigation Unit (SIU). She
ordered that her judgment be referred to the SIU for action because
the Proclamation was wide enough to include the award to TFM.
Review
Application
[24]
While it is not necessary to regurgitate
all the grounds for review, having regards to the events that
followed, they are informative
and essential to demonstrate the
approach adopted by TFM and the City to the review challenge.
[25]
The
City first claimed it embarked on the RFI (also referred to as a
Request for Confirmation) process because the tender process
under
Bid A781 terminated on 26 March 2019. When it was clear there
was no other bidder qualified, it approached the market
directly for
a ‘due diligence’ into the availability of fire engines
and rescue vehicles on 16 May 2019. At the same
time, it claimed this
was not an initiation of a procurement process. It justified its
action claiming it had rationally embarked
on the deviation process
under Regulation 36 of the MSCM Regulations, which was equivalent to
the National Treasury Regulation
16A6.4, to address the shortage of
fire and rescue vehicles.
[7]
The
City was no longer able to adequately respond to fire emergencies to
protect citizens.
[26]
On 18 March 2020, the day scheduled for the
hearing of the review, Marcé launched an application to
introduce a supplementary
affidavit following a press statement
issued by the Executive Mayor of the City, Mr Makhubo, on 19 February
2020. At odds with
the City’s denials and opposition, he stated
that there were irregularities, poor contracting practices, and a
self-created
emergency in the procurement of the red fleet. He
further stated that two officials responsible for the procurement
within the
GCSS, Mr Jimmy Maluleke and Mr Sanjay Dubru, were
suspended pending an investigation.
[27]
In view of the conflict in the evidence, I
ordered that the Mayor be joined as the third respondent, and for him
to file a supplementary
affidavit dealing with the allegations in
Marcé’s supplementary affidavit. I also directed the
future conduct of the
proceedings, and the filing of further
affidavits.
[28]
When
the hearing resumed on 27 May 2020, the City made an unexpected
about-turn, and in affidavits filed by the Mayor and the City
Manager, unequivocally conceded the irregularity and unlawfulness of
the tender and award.
[8]
Materially, the City Manager claimed he was not aware of the
allegations of irregularities or litigation until it was brought to
his attention by the Mayor. As indicated previously, the litigation
was managed by Mr Isaac Mogashoa, the Group Head: Legal and
Contracts. As a result, on 2 June 2020, the Court declared the award
of the contract irregular and constitutionally invalid.
[9]
Significantly, it was ordered that:
‘
3.
…
4.
In addition to the order in paragraph 3
above, the second respondent must file an affidavit by no later than
17 June 2020, with
details of:
4.1.
The status of implementation of the
agreement entered into between the first and second respondents (“the
agreement”).
4.2.
All payments made by the second respondent
to the third party suppliers to fulfil the agreement.
4.3.
All payments made to the directors,
shareholders, agents or employees of the second respondent whether as
incentive scheme, profit
share, dividend, commission or any other
form pursuant to the agreement.
5.
The first respondent may file a further
affidavit by no later than 17 June 2020 dealing with:
5.1.
Allegations of corruption and malfeasance
made by the third applicant;
5.2.
The alleged R48 million cost of
refurbishment of vehicles provided by the second respondent;
5.3.
The status of implementation of the
agreement; and
5.4.
The status of investigations being
undertaken into allegations of corruption and malfeasance.
6.
…
7.
…
8.
No further affidavits will be permitted.
9.
In light of the concession by the first
respondent that the award to the second respondent was irregular and
that the agreement
entered into the parties was unlawful:
9.1.
It is declared that the award of the
contract to the second respondent is constitutionally invalid;
9.2.
It is declared that the agreement entered
into between the first and second respondents pursuant to the award
is constitutionally
invalid;
9.3.
Pending the determination of a just and
equitable remedy, and in order to preserve the
status
quo
:
9.3.1.
The declaration of invalidity in 9.2 above
is suspended;
9.3.2.
Notwithstanding the suspension in 9.3.1
above, the first and second respondents shall not implement the
agreement during the period
of suspension without the leave of the
Court;
9.3.3.
In lieu of the Performance Bond not
furnished by the second respondent to the first respondent, the
second respondent is to provide
an irrevocable and unconditional bank
guarantee to the satisfaction of the court (payable upon the order of
this court) in favour
of the first respondent in the amount of
R134 380 700.52;
9.3.4.
Alternatively
,
a presentation of an irrevocable indemnity in favour of first
respondent to the satisfaction of the court (exercisable upon the
order of the court) in favour of the first respondent from the second
respondent’s risk insurers for the amount of R134 380 700.52.
9.3.5.
The second respondent is to submit proof on
affidavit (served on all the parties) by 17 June 2020 that 8.3.3
above has been complied
with.’
Concessions
of irregularities and unlawfulness
[29]
The
concessions affirm the complaint of the applicants. Despite the
concessions, the Court is obliged to assess the
breach
of
the administrative justice prescripts, and the extent of the
departure from the laws regulating the procurement framework. Their
nature and materiality influence the Court’s views on the just
and equitable relief. In essence, the City conceded prayers
2, 3, and
4 of the Notice of Motion as dealt with
seriatim
below.
Irregular
tender process
[30]
The City initially dismissed Marcé’s
complaint contending that Marcé conflated Bid A781 with the
RFI procurement
process. There were conflicting statements by the
City and TFM as to whether, and when, Bid A781 was cancelled. They
presented
conflicting versions on whether the RFI was a ‘due
diligence’ process, a new tender process, or an extension of
the
Bid A781 tender process.
[31]
The
City claimed that Bid A781 was cancelled on 26 March 2019 when the
BEC determined no other bids had qualified, and advised the
EAC
accordingly. It disputed that it had engaged in a tender process and
persisted that it merely conducted a due diligence into
the
availability of the vehicles.
[10]
Despite issuing a letter of extension of the tender on 27 May 2019,
it contended this was some 60 days after the period for the
validity
had already lapsed. There was no longer a valid tender under Bid
A781.
[32]
On the other hand, Mr Mlonzi (for TFM)
contended before Modiba J that the RFI process was an extension or
continuation of the Bid
A781 process, with minimal deviations, hence
the truncated time periods for the delivery of the fire engines.
Later, TFM made an
about-turn during the review application, claiming
that the RFI and Bid A781 were discrete tender processes. It
based this
new position on the deviation application of 11 June 2019,
and the EAC resolution dated 18 June 2019, claiming that the
deviation
application and approval did not mention Bid A781.
Breach
of s 217 of the Constitution and the Municipal Supply Chain
Management Regulations
[33]
The deviation purportedly implemented under
Regulation 36 of the MSCM Regulations breached s 217 of the
Constitution. The process
was designed for minor deviations and
contracts. The contract price far exceeded the threshold value of
R200 000 (inclusive
of VAT) envisaged in the City’s Supply
Chain Management Policy. The policy requires that all tenders above
the threshold
be subject to a competitive bid or tender process. A
deviation is permissible in exceptional or emergency cases.
[34]
Marcé alleged that the necessity for
emergency procurement was self-created, and that there were no
exceptional circumstances
which justified the City resorting to
Regulation 36 of the MSCM Regulations. According to the City’s
Supply Chain Management
Policy, a deviation caused by poor planning
or procrastination, leading to the situation being declared an
emergency, will result
in a deviation approved under those
circumstances being classified as irregular.
[35]
The
City had put the cart before the horse, because the permission for
the deviation was sought on 11 June 2019 – after it
had already
initiated the RFI process. The record of the meeting of the EAC
reveals that some of its members departed from the
assumption that
the previous tender had been cancelled.
[11]
When challenged, the City first sought to disavow and recast the RFI
process as a ‘due diligence’ and inquiry into
the
availability of vehicles. This was a misrepresentation of the true
facts and inconsistent with the award of the contract to
TFM. In
addition, the record reveals that it was only on 31 July 2019 that Mr
Andries Mucavele, the Deputy Director, Fire and Rescue
Public Safety
(EMS) compiled a report to the EAC requesting permission to cancel
Bid A781. The City Manager approved the cancellation
on 21 August
2019. All these steps were taken retrospectively, after the
conclusion of the contract with TFM.
Non-compliance
with tender specifications
[36]
Despite first denying that the impugned RFI
procurement process overlapped with the Bid A781 tender process, the
City admitted that
the specifications for the vehicles, which were
the subject of the due diligence, were the same as those forming the
subject of
Bid A781. Even though the RFI did not provide
specifications ostensibly because it was a ‘due diligence’,
the City
nevertheless used Bid A781 specifications to evaluate the
responses.
[37]
TFM agreed that the RFI did not provide
that specification and requirements of Bid A781, but merely refer to
‘
what is immediately available for
delivery’
. It claimed it
reasonably assumed specifications for Bid A781 would be used ‘
as
far as possible’
in responding to
the RFI as the tender specifications for Bid A781 were recent.
Accounting for the short delivery time frames,
it claimed to have
marshalled all resources and, unlike Marcé and Fire Raiders,
provided the City with firm delivery dates.
[38]
On the other hand, the City Manager stated
that he approved the deviation on the basis that the procurement
would be according to
the specification approved for Bid A781. The
request for deviation states that specifications which were approved
by the Bid Specification
Committee (BSC) in Bid A781 were used for
the due diligence process in the RFI. It further stated as follows:
‘The intention
was to mirror tender A781 like for like since
the requirements for EMS was determined by the BSC and considered all
future expansions
within the city.’ As said, this information
was not disclosed in the RFI.
[39]
Curiously,
on 19 August 2019, the City concluded a further agreement with TFM.
This second SLA did not contain the specifications
recorded in Bid
A781; instead, materially different specifications were agreed on for
a number of items. Minutes of the meeting
held between the City and
TFM on 12 September 2020, after the agreement was signed, reveal that
EMS raised issues about the non-compliance
with the tender
specification.
[12]
Even
though, as I understand it, meetings were held with the EMS
representatives, and specifications leading to variation orders
agreed on, these were at variance with Bid A781. Significantly, they
were agreed after the fact and award – accentuating
the cause
for complaint that the City and TFM deliberately embarked on a
mercurial tender process to favour TFM.
[40]
The appointment of TFM was not according to
the specification for Bid A781 and was inconsistent with the
City Manager’s
approval, as well as that of the EAC and the
City’s procurement prescripts.
[41]
Fire Raiders asserted that TFM was awarded
the contract even though it has never designed, manufactured, and
homologated fire engines.
It claimed that as of 19 February
2020, the day the statement by the Mayor was released, TFM had not
delivered the fire engines,
but auxiliary service vehicles instead,
which did not meet the specification. If the City had followed a
lawful procurement process,
TFM would not have been a successful
bidder. The City, on the other hand, relied on certificates and
qualifications presented by
TFM to justify the appointment.
[42]
Marcé and Fire Raiders complained
further that TFM did not meet the requirements of the RFI. The RFI
stipulated that the
vehicles should be ‘on rubber’ (i.e.
already manufactured and ready to be delivered) and not subject to a
manufacturing
process. Amongst the concerns raised by the Mayor, was
whether the vehicles from TFM would meet the City’s operational
requirements.
He claimed that the vehicles already delivered had to
be retrofitted at an unbudgeted cost of R48 million. There was a
dispute
about this claim. The assertion by the Mayor was later
retracted by the service department EMS. He appears to have been
misinformed
on this aspect.
[43]
Nevertheless, despite the revised SLA and
specifications agreed to post the award, two variation orders to the
value of R3 067 875
and R2 449 474.20 were agreed
on by the City and TFM. The first variation was at the instance of
TFM. It was submitted
that it was occasioned by the fact that TFM
omitted certain aspects in its calculations. The second variation was
at the instance
of the City (the EMS). The EMS’s variation was
attributed to the fact that it, as the end user, was excluded from
the tender
specification process and sourcing of the equipment until
after the award of the contract. TFM failed to address the variations
occasioned by its omission, asserting they were only five and a
negligible 0,53% of the total contract value.
Irregular
upfront payment of R172 million
[44]
The press statement by the Mayor reveals
that the City made advance and irregular upfront payments totalling
R172 992 382.71
to TFM to execute the contract. Marcé
complained that the payments were made even though the review had
already been launched
and proceedings were pending.
[45]
Bid A781 required bidders to fund the
entire production of the red fleet upfront. Both SLAs, as well as the
terms for the approval
of the deviation by the EAC, required that
payment would be initiated and made on delivery, within 30 days after
the receipt of
the original invoice. Clause 7 of the SLAs provided as
follows:
‘
7.4
Delivery Acceptance Notes issued by the City's Contract (Project)
Manager confirming the delivery of the goods shall be deemed
to be
supporting documentation for purposes of payment in terms of this
Agreement, unless otherwise stipulated in writing by the
City.
7.5
The City shall only make payment upon the receipt of all
documentation with no exception. Payment shall be due and payable
within thirty (30) Days after receipt of the original invoice and
supporting documentation by the City's Contract (Project) Manager.’
[46]
The RFI response by Mr Mlonzi committed
that TFM would deliver the vehicles ‘
without
an upfront deposit, thereby eliminating financial risk to the City’
.
He claimed TFM had the financial resources to meet its contractual
obligations.
[47]
The City first denied making the upfront
payments to TFM. However, during the urgent application, it claimed
to have made a payment
of R75 million for 17 vehicles which it
had received. On the other hand, a subsequent affidavit by Mr Savage
(the director
of TFM) disputed that the contract was funded by the
upfront payments. He claimed that TFM received R38 611 682.17
for
20 vehicles delivered to the City on or about 6 November 2019,
the production of which was financed from its funds. Mr Savage
claims that he had to notify TFM’s bankers and as a result,
funding and facilities related to the project were withdrawn,
and its
banker terminated its facilities. The City insisted on the completion
of the contract. He recast the payments as ‘
commitment
payments’
made after the review
proceedings had commenced.
[48]
Mr Savage justified the payments as part of
a risk mitigation strategy for TFM and its suppliers resulting from
the pending litigation
and on the grounds that TFM refused to be
exposed to the risk of not receiving payments for work in progress
(WIP) where vehicles
were remodelled for the City’s
specifications. He claimed that at the instruction of the City, TFM
provided invoices with
VIN and chassis numbers to effectively place
the ownership of the vehicles and built equipment items in the City’s
hands.
Mr Savage disputed that TFM received payments beyond 24
October 2019, contending that the Mayor was wrong and had been
misinformed.
There is no evidence of when the de-risk strategy
claimed by Mr Savage was agreed on and approved, or even that it was.
[49]
Payments totalling R172 million were made
from 27 September to 15 November 2019 as follows:
Date
Item
Amount
27 Sep 2019
15x Grass Fire Unit-Toyota 4.2D 4x4
1x Light Rapid Fire and
Rescue
Intervention
Vehicle
R20 120 363.85
8 Oct 2019
2x Level 2 incident command vehicles
R8 840 077.84
16 Oct 2019
3x Major Pumper Rear Mount
4000LMP and Heavy-Duty
Hazmat Vehicle
UD Croner PKE 280
H35
R30 651 111.14
17 Oct 2019
2x Major Pumper Rear Mount 4000LMP
R16 522 428.48
23 Oct 2019
2x Heavy Duty Air Trucks
R8 156 035.96
11 Nov 2019
2x Industrial Pumper 6000LPM
R15 794 43.22
12 Nov 2019
4x Water Tanker Pumpers
R27 795 35.68
14 Nov 2019
6x Light Rapid Fire & Rescue
Intervention
vehicles
R26 233 585
15 Nov 2019
2x Heavy Duty Rescue Units
R18 878 413.14
[50]
An order by the City, dated 24 July 2019,
exposes that the payment terms were altered from those provided in
the contract to ‘
COJ Pay
immediately w/o deduction
’. Given
the size of the contract, there is no evidence that the alteration
and the payments were approved by an identifiable
procurement
governing structure.
[51]
TFM’s tax invoices were generated
between 19 September 2019 and 20 September 2019, before the
launch of the review application.
Payments were made thereafter, even
though the review application had been launched and was pending. Some
of the payments were
made while the urgent application was due for
hearing and/or in the process of adjudication between 12 and 16
November 2019.
[52]
The
payments contravened the Local Government: Municipal Finance
Management Act 56 of 2003 (the MFMA) and were not made in accordance
with the City’s expenditure management practice which prohibits
advance payments. They were also contrary to the terms of
the SLA the
City concluded with TFM. The payments, as well as the haste with
which they were made, underpinned the applicants’
complaint
that there was corruption and malfeasance in respect of the tender
and contract. I return to this aspect later in the
judgment.
Failure
to call up and present a performance bond/guarantee.
[53]
The
aborted Bid A781,
[13]
as well
as the condition for the approval of the deviation, the award, and
subsequent appointment was that TFM would furnish a
performance
guarantee not exceeding 20% of the contract value and financial
obligation in favour of the City valid for the duration
of the
contract.
[14]
This term was
incorporated in Clause 8.12 of the SLA.
[15]
The City failed to call up the performance guarantee and TFM did not
tender it either.
[54]
Despite this Court’s order of 2 June
2020 calling on TFM to present a guarantee of R134 380 700.52,
alternatively,
a softer landing in the form of an indemnity from its
insurers, TFM failed to do so. It sought to offer a Notarial Bond as
security
over the vehicles, and thereafter filed an application for
leave to appeal the order. It claimed the amounts received were
expended
in the production of the vehicles, some of which were
available for delivery, but for the interdict. Mr Else (a director
and CFO
for TFM) relied on emails dated 27 September 2019 contending
that its banker, Absa, declined to provide the guarantee. Curiously,
even though in the contract signed in July, TFM also listed Bidvest
Bank, a division of its erstwhile Bidding partner for Bid A781,
as
its banker, it did not present any evidence that it had approached
Bidvest Bank for the guarantee.
[55]
In so far as the indemnity, TFM presented
letters dated 9 June 2020 and 11 June 2020 from Credit Guarantee
Insurance Corporation
of Africa (Pty) Ltd, Guard Risk Tailored Risk
Solutions, Lombard Insurance, and Hollard declining indemnity cover
ordered by the
Court. The letter from Lombard Insurance reveals that
company previously declined to provide cover to TFM in August 2019.
Change
of delivery time frame
[56]
When regard is had to TFM’s response
of 20 May 2019 to the RFI, Mr Mlonzi represented to the City Manager
that TFM would deliver
the vehicles and adhere to the following time
frames:
Item
Time frame
Major
Pumper
Within 24 weeks
Water
Tankers
Within 18 weeks
Heavy Duty Rear
Mount
Within 12 weeks
Telescopic Aerial Ladder
Within 10 weeks
Heavy Duty Rescue
Units
Within 8 weeks
Industrial Pumpers
Within 8 weeks
Heavy Duty Air Trucks
Within 8 weeks
Heavy Duty Hazmat
Within 8 weeks
Light Rapid Fire &
Rescue Intervention Vehicles
Within 8 weeks
Prime Mover
Within 8 weeks
Hydraulic Ladder Platform
Within 8 weeks
Level Two incident
command vehicle
Within 8 weeks
Grass Fire
Vehicles
5 units available every 4 weeks.
[57]
The request for deviation states that
orders for fire and rescue vehicles took between six to twelve months
to deliver – which
would not solve the emergency situation the
City faced. The City justified the deviation and the appointment of
TFM on account
that TFM had the chassis for the vehicles at its
manufacturing plant in Clayville. It noted that none of the OEM’s
it had
approached, except for TFM, could deliver the vehicles within
the time frame required. The last delivery would take ten weeks from
the last order date. TFM had represented that it had the chassis for
the fire and rescue vehicles and could deliver the vehicles
within
ten weeks from the order date. According to this, Fire Raiders had
only one refurbished fire engine available on a lease.
Leasing was
against the Group Fleets Policy of the City which required outright
purchases.
[58]
As
stated, the first SLA (dated 19 July 2019) envisaged delivery over a
period of three months, being 15 November 2019 or in line
with the
agreed delivery schedule and RFI.
[16]
If the vehicles were not delivered, the City had the right to impose
a penalty of 1%, but not exceeding 5% of the purchase price
for the
vehicle(s), calculated for each month the delivery is delayed from
the scheduled date. The second SLA on 19 August
2019 extended
performance and delivery terms to twelve months.
[59]
When opposing the urgent application, TFM
relied on the strict delivery schedule, contending that the agreement
had been implemented
and delivery of the balance of the vehicles was
eminent. It also claimed to have already issued the first order for
40 vehicles
amounting to R198 196 383.47 (including VAT).
TFM stated that at the time of the launch of the application for
review
in September 2019, it had already placed the second order on
13 August 2019 for four vehicles amounting to R27 075 849.
[60]
On 26 November 2019, Mr Savage wrote to Mr
Jimmy Maluleke about the Work in Progress (WIP). He stated as
follows:
‘
We
are able to confirm 30 vehicles are in various stages of completion,
Work In Progress (WIP), which include;
Item
Description
Number of Vehicles
1.
Heavy Duty Rescue Units
x 2 vehicles
2.
Industrial Pumpers
x 2 vehicles
7.
Midship Pumpers
x 6 vehicles
8.
Water Tankers
x 4 vehicles
9.
Rapid Intervention Vehicle
x 7 vehicles
13.
Heavy Duty Rear Mounted Pumpers x 9 vehicles
Total
value of Work in Progress for the above 30 vehicles amounts to
R127 340 676-01 (one hundred and twenty-seven million
three
hundred and forty thousand six hundred and seventy- six rand one
cent) at 26
th
November 2019.
We
are also able to confirm that 5 x Heavy Duty Rear Mounted Pumpers are
scheduled for completion at the end of November 2019. (Item
13)’
[61]
The schedule attached to TFM’s Rule
18(2) application (launched in January 2020) indicates that the Major
Midship Pumper vehicles
were prepared by Scania South Africa, part of
a Swedish Truck OEM. The Grass Fire Units were Toyota Land Cruisers
sourced from
Toyota South Africa, with pumps imported from Italy. The
Incident Command Vehicles were from Mercedes Benz South Africa. The
Heavy-Duty
Rescue Units were by UD South Africa, a leading Japanese
Truck OEM with an assembly plant in Rosslyn Pretoria. UD South
Africa
also supplied TFM with Industrial Pumpers.
[62]
TFM sourced the Light Rapid Fire and Rescue
Intervention vehicles from Iveco, an Italian truck manufacturer with
a branch in South
Africa. It sourced the Heavy Duty Rear Mount Pumper
from Mercedes Benz South Africa. It had to source the Volkan ladder
trucks
and Vema Platforms from Turkey and Finland. The specialised
equipment, water tanks and pumps were sourced from WS Darley, USA and
Godiva, United Kingdom (indicative of longer lead times for importing
and transporting the equipment).
[63]
Delivery within the time frame stipulated
in the RFI was an impossibility by any of the parties, including TFM.
The impression is
that the alteration to the delivery time frames
were tailored to favour TFM.
The
investigations into corruption and malfeasance
[64]
In November 2019, reports of corruption in
the procurement process surfaced in the mainstream media. Because
this information came
to light after Marcé launched the
review, it sought to introduce these allegations in its replying
affidavit as relevant
new facts supporting its complaint. The City
and TFM first objected to the introduction of this information. The
City dismissed
the allegations as an attempt to invoke suspicion and
malfeasance and corruption by innuendo. It contended it was a
diversion from
the facts and fell to be rejected.
[65]
Subsequently, it emerged that intimation of
corruption and malfeasance were also from reports by a whistle blower
in December 2019.
Fire Raiders led the charge in respect of these
allegations. It was reported that Mr Mlonzi (then the Executive
Chairman of TFM)
who led the defence of the contract during the
urgent application, was arrested on allegations of fraud, money
laundering, and
breaches of the MFMA. Kwane Capital (Pty) Ltd, over
which Mr Mlonzi presides, is a major shareholder of TFM. There were
further
reports that investigations were underway into Kwane Capital
(Pty) Ltd for irregular tenders in various municipalities, procured
through Regulation 36 deviations. These allegations were also
referred to the SIU. It was reported that the SIU was investigating
the award to TFM and other contracts procured through the Regulation
36 deviation process.
[66]
Contrary
to the position by the City, the statement by the Mayor revealed that
two City officials, instrumental in the award of
the tender, were
criminally charged and suspended from work, pending investigation.
The Mayor who assumed office around the same
period as when the
allegations of corruption were made, states that he initiated an
investigation into whether the irregularities
and maladministration
relative to the contract may have been influenced by fraud and
corruption. The Group Forensic and Investigation
Services (GFIS)
investigated the allegations and tabled a report titled ‘Alleged
irregularities regarding the procurement
and award to TFM Industries
the Red Fleet Contract and the alleged irregular payments made to TFM
for the Red Fleet Contract’
dated 14 September 2020.
[17]
[67]
Severely
hampering the Court’s ability to interrogate the outcome of the
investigation, on the eve of the hearing scheduled
for 22-23 October
2020, the City Manager filed a supplementary affidavit on 21 October
2020 to present the report.
[18]
He could not account for the delay in disclosure, other than that he
was reminded by his attorneys of it on 16 October 2020. The
late
filing precipitated further affidavits and submissions from Fire
Raiders and TFM.
[19]
I have
considered all the submissions by the parties to the extent that they
deal with allegations of corruption, because that
was the main issue
germinating from my order on 2 June 2020.
[68]
TFM argued that it was an innocent party,
and that the forensic report did not make any aspersions on the
company; it argued that
the report does not make any allegations or
findings of impropriety, misconduct, or maladministration – let
alone malfeasance
– against it. TFM claimed that the report
dispels any insinuation of corruption or fraud. It also sought to
introduce further
evidence about the outcome of investigations by the
Hawks and the SIU, as well as information from the Tshwane
Magistrate’s
Court, pertaining to the withdrawal of charges
against the two City officials who had been criminally charged. To
bolster the absence
of corruption and fraud, it claimed these
employees had returned to work, a fact disputed by the City Manager.
[69]
I have closely read the report. It has a
disclaimer about information obtained relevant to the investigation
and does not guarantee
that all relevant documentation had been
obtained. The report concludes that there was no evidence which
suggested any acts of
corruption and/or fraud by any of the
individuals involved in the tender. This conclusion is reached
notwithstanding the narrow
scope and terms of reference. Clause 3.1
and 3.2 of the executive summary states that the mandate of the GFIS
was limited to the
investigation, of the circumstances surrounding
the tender, the allegations of irregularity in the procurement and
the award, and
the merits of the allegations of the payments made to
TFM. I deal with this aspect in the section dealing with the just and
equitable
relief.
[70]
I
find that the concession by the City was properly made, because the
whole procurement process contravened the relevant procurement
framework; it was tainted and undermined fundamental constitutional
principles contained in s 217(1) of the Constitution, notably,
to
ensure competitiveness and cost-effectiveness. I find that the
mismanagement of the tender procurement process was deliberate.
I
note that the effect of the concession curtailed the proceedings,
saving the Court time and legal costs. On the other hand, a
deluge of
affidavits, submissions, and counter-submissions ensued, adding more
paper volume to the dispute.
[20]
[71]
A part of the Court’s order of 2 June
2020 required that TFM disclose fully to the Court:
71.1.
The status of the implementation of the
agreement;
71.2.
All payments made to third party suppliers
to fulfil the agreement;
71.3.
All payments made to directors,
shareholders, agents or employees of TFM whether as an incentive
scheme, dividend, profit share,
commissions or any other form
pursuant to the agreement.
[72]
TFM claims that it paid the suppliers and
has not realised a profit from the contract. It provided the
Court with detailed
schedules of project expenses revealing the costs
of each vehicle, materials, direct and indirect labour costs,
including payments
to its suppliers. Further, TFM estimates that only
15% of its employees and director’s remuneration on a total
cost to company
derives from the contract. It states that no
extraordinary bonuses or incentives were paid to any director,
employee, or supplier
and that no distribution was made to
shareholders. I observe that in view of the time frame, the
information was not audited. I
deal with this in the order.
Status
of the implementation of the agreement
[73]
According to Mr Savage (for TFM) a total of
44 fire and rescue vehicle orders were issued by the City. Of these,
20 were delivered,
leaving a balance of 24 vehicles. Of the remaining
24 vehicles, 20 have already been paid for by the City. Eight of the
vehicles
are ready for delivery, and 12 are at different stages of
completion. The remaining four vehicles are in partial manufacture
and
have not been paid for by the City.
[74]
On the other hand, the investigation report
states that there was an asset inspection and verification exercise
conducted on 18
December 2019 by the Group Forensics and
Investigations Service into the 40 vehicles ordered and paid for. It
found that:
74.1.
Only 15 Grass Fire Units valued at R13 984
were delivered.
74.2.
As of 13 February 2020, when the asset team
conducted an inspection of the 25 vehicles still with TFM, it found
14 vehicles valued
at R86 513 176.58 were at TFM’s
plant but not ready for use.
74.3.
Of these, six were reported to be at TFM’s
Durban plant.
74.4.
Five were ready for delivery to the Midrand
Fire Station.
74.5.
Whether the City would incur further costs
of R48 million to refit the vehicles was in dispute.
[75]
It is against the backdrop of all these
facts that I consider the just and equitable remedy in terms of s 172
of the Constitution.
Just
and equitable relief
Parties’
Submissions
[76]
Ms
Pillay (counsel for Marcé) argued that public interest weighs
heavily in favour of the undoing of the contract. Marcé’s
first stance was that the City and TFM should not benefit from an
unlawful contract. It argued that the Court should order a
restitution.
To vindicate the harm done to public procurement, it
contended that the Court should order TFM to repay monies received.
Later,
Marcé revised its position, providing the Court with a
range of options, part of which was that the City must be permitted
to retain the 15 vehicles already delivered, but that no further
steps are taken to implement the unlawful and tainted SLA.
[77]
On
the other hand, Fire Raiders opposed the remedy sought by the City
Manager and TFM on the basis that it is not just and equitable.
It
complained of collusion between TFM and the City, because of their
similar approach to the relief, stating that this should
not continue
unabated. It contended that the Court should cancel the contract and
order TFM to return the sum of R152 372 018.86,
which
according to its calculations, was the correct amount received. It
argued that despite my order requiring financial disclosure,
and the
financial information, TFM had not disclosed the profits it made from
the contract. It submitted that the Court must direct
that TFM
prepare audited financial statements within 30 days of the order and,
in addition, order it to return all profits it made
from the
contract.
[78]
The
Mayor deferred to the City Manager to determine the appropriate
remedy. The City criticised Marcé for advancing its business
interests. It accepted that the consequences of the invalidity must
be corrected and reversed where they can no longer be prevented.
It
attributed the low levels of the red fleet and its predicament to the
collapse of the 2015 tender with Fire Raiders. Mr Maenetje
(counsel
for the City) argued that despite the City’s blameworthiness,
the conduct is addressed by the declaration of invalidity.
He argued
that the Court must place the needs and public interest ahead and
take account of the fact that the City acted as soon
as it received a
report from a whistle blower about the irregularities in December
2019.
[79]
Mr
Hollander for TFM, forced to concede, argued that the irregularities
are not significant. He contended that the irregularities
were not
occasioned by TFM, but by the City. He submitted that the Court
should also consider that TFM had established a production
line to
deliver the contract. It had mobilised local and international
suppliers to implement the contract. Mr Hollander submitted
that the
Court should consider the standing time from the interdict and the
costs of the resources already invested towards the
production of the
92 vehicles. In so far as the order variations, he claimed these were
negligible – and were mainly because
certain components were no
longer available in the market. TFM also relied on the comparative
pricing in Bid A781, in that, as
I understand it, it shows that there
was a saving and financial benefit from TFM’s appointment, as
it was cheaper than Fire
Raiders and Marcé. TFM submitted that
it faces the risk of financial loss, the loss of production capacity,
and loss of
revenues if the contract is not implemented to
completion. TFM contended that its realisable profit margin would
have been at the
end of the contract when the full fleet was
procured.
[80]
Despite the extent of the irregularities,
TFM asks that the Court grants an order that preserves its
contractual rights and which
allows it to complete the contract in
full. The effect of such relief would be to allow TFM to deliver the
20 vehicles in the production
line and, in addition, complete the
balance of the contract, comprising 48 vehicles which are not yet
ordered or paid for. TFM
proposes that it be permitted to deliver the
vehicles as follows:
80.1.
Eight vehicles within five business days of
the order being granted (these are complete and ready for delivery);
80.2.
Four vehicles on or before 22 December
2020;
80.3.
Two vehicles on or before 29 January 2021;
80.4.
Two vehicles on or before 26 February 2021;
80.5.
Two vehicles on or before 26 March 2021 and
two vehicles on or before 30 April 2021 (these are to be
completed);
80.6.
Four of the balance of the vehicles ordered
but not paid for would be delivered in June and September 2021
respectively;
[81]
In
the alternative, TFM joins issue with the remedy proposed by the
City.
Structure
of the just and equitable remedy
[82]
The
structure for determining just and equitable relief finds expression
in s 172(1)(b) of the Constitution read with s 8(1)
of the
PAJA.
[21]
The Constitutional
Court in
AllPay
Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer
of the South African Social Security Agency (No 2)
held
that:
[22]
‘
Logic,
general legal principle, the Constitution, and the binding authority
of this Court all point to a default position that requires
the
consequences of invalidity to be corrected or reversed where they can
no longer be prevented. It is an approach that
accords with the
rule of law and principle of legality.’
[83]
The
Constitutional Court also highlighted the multi-dimensional approach
necessary to formulate a ‘just and equitable’ remedy
.
The
court is conferred with wide, flexible remedial powers which are
without self-censor, to fashion a remedy which is appropriate
to the
circumstances of the case, just, practical, and equitable.
[23]
[84]
In
Steenkamp
NO v Provincial Tender Board, Eastern Cape
,
[24]
cited with approval in
AllPay
(2)
,
Moseneke DCJ stated:
‘
It
goes without saying that every improper performance of an
administrative function would implicate the Constitution and entitle
the aggrieved party to appropriate relief.
In
each case the remedy must fit the injury. The remedy must be fair to
those affected by it and yet vindicate effectively the right
violated
….
The
purpose of a public law remedy is to pre-empt or correct or reverse
an improper administrative function. In some instances the
remedy
takes the form of an order to make or not to make a particular
decision or an order declaring rights or an injunction to
furnish
reasons for an adverse decision.
Ultimately the purpose of a
public remedy is to afford the prejudiced party administrative
justice, to advance efficient and effective
public administration
compelled by constitutional precepts and at a broader level, to
entrench the rule of law
.’ [Emphasis added]
[85]
The
Constitutional Court in
AllPay
(2)
referred to this as the ‘corrective principle’, stating
as follows:
[25]
‘
This
corrective principle operates at different levels. First, it must be
applied to correct the wrongs that led to the declaration
of
invalidity in the particular case. This must be done by having due
regard to the constitutional principles governing public
procurement,
as well as the more specific purposes of the [relevant applicable
legislation].
Second, in the context of
public-procurement matters generally, priority should be given to the
public good
.
This
means that the public interest must be assessed not only in relation
to the immediate consequences of invalidity…but
also in
relation to the effect of the order on future procurement ....’
[Emphasis added]
[86]
This
‘corrective principle’ applied by the Constitutional
Court in
Allpay
(2),
also
developed what is colloquially referred to as the ‘no-profit-no-loss’
principle.
[26]
In this regard the Constitutional Court stated:
‘
It
is true that any invalidation of the existing contract as a result of
the invalid tender should not result in any loss to [the
party
awarded the contract].
The
converse, however, is also true. It has no right to benefit
from an unlawful contract. And any benefit that it may derive
should
not be beyond public scrutiny
.’
[Emphasis added]
[87]
In
Millennium
Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo
Province and Others
,
[27]
Jafta JA noted that, subject to the facts of the case—
‘…
To
set aside the decision to accept the tender, with the effect that the
contract is rendered void from the outset, can have catastrophic
consequences for an innocent tenderer, and adverse consequences for
the public at large in whose interests the administrative body
or
official purported to act.
Those
interests must be carefully weighed against those of the disappointed
tenderer if an order is to be made that is just and
equitable
.’
[Emphasis added]
[88]
In
Bengwenyama
Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and
Others
,
[28]
Froneman J stated that:
‘
The
apparent anomaly that an unlawful act can produce legally effective
consequences is not one that admits easy and consistently
logical
solutions. But then the law often is a pragmatic blend of logic and
experience. The apparent rigour of declaring conduct
in conflict with
the Constitution and PAJA unlawful is ameliorated in both the
Constitution and PAJA by providing for a just and
equitable remedy in
its wake. I do not think that it is wise to attempt to lay down
inflexible rules in determining a just and
equitable remedy following
upon a declaration of unlawful administrative action. The rule of law
must never be relinquished, but
the circumstances of each case must
be examined in order to determine whether factual certainty requires
some amelioration of legality
and, if so, to what extent.
The
approach taken will depend on the kind of challenge presented –
direct or collateral; the interests involved and the extent
or
materiality of the breach of the constitutional right to just
administrative action in each particular case.’
[Emphasis added]
[89]
Froneman J further stated—
‘
It
would be conducive to clarity, when making the choice of a just and
equitable remedy in terms of PAJA, to emphasise the fundamental
constitutional importance of the principle of legality, which
requires invalid administrative action to be declared unlawful. This
would make it clear that the discretionary choice of a further just
and equitable remedy follows upon that fundamental finding.
The
discretionary choice may not precede the finding of invalidity. The
discipline of this approach will enable courts to consider
whether
relief which does not give full effect to the finding of invalidity,
is justified in the particular circumstances of the
case before it.
Normally this would arise in the context of third parties having
altered their position on the basis that the administrative
action
was valid and would suffer prejudice if the administrative action is
set aside, but even then the “desirability of
certainty”
needs to be justified against the fundamental importance of the
principle of legality.’
[29]
[90]
In
addition to the above principles, I consider the attitude and
approach of the parties revealing in the extent of their
demonstration
of a commitment to the constitutional injunctions for
good governance and good citizenship paramount. As Cameron J pointed
out
in
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty)
Ltd
,
[30]
the City is the primary agent of the Constitution and has ‘
a
higher duty on the state
to
respect
the law, to fulfil procedural requirements and to tread respectfully
when dealing with rights
.’
Government ‘
must
do right, and it must do it properly
.’
[31]
[91]
In
the context of a self-review, the Constitutional Court in
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Ltd
highlighted
the importance of coming to court with clean hands, lamenting the
fact that the state had not done so in a ‘
sincere
effort
to
clean house and rectify past wrongs and unlawfulness...’
[32]
In terms of ordering a just and equitable remedy, the court in
Buffalo
City
declared the contract invalid, but did not set it aside. This
approach ‘preserves rights which have already accrued but does
not permit a party to obtain further rights under the invalid
agreement.’
[33]
[92]
Given
that the review was brought in terms of the PAJA, s 8(1) thereof
provides that the court, may after setting aside the
administrative
action, (1) remit the matter for reconsideration (with or without
directions); or (2) in exceptional cases, substitute
or vary or
correct the defect resulting from the administrative action; or (3)
provide a compensatory relief. There is no closed
list of factors the
court may take into account, they include but are not limited to: (1)
the public interest; (2) the extent or
materiality of the breach, and
its effect on the interests of all parties concerned;
[34]
(3) the relative blameworthiness of the parties; (4) the extent of
performance under the impugned contract; (5) the effluxion of
time;
(6) the interests of the reviewing party; (7) the interests of the
successful tenderer; and (8) the availability of alternative
remedies.
[93]
In
the context of self-review, authorities reveal two categories of
cases, namely where a tenderer, acting in good faith, takes
the
State’s assurances as of the lawfulness of the contract at face
value to its detriment (
Gijima
)
on the one end, and where the tender is vitiated by corruption, fraud
and fronting on the other, such as in the case of
Swifambo
Rail Leasing (Pty) Limited v Passenger Rail Agency of South
Africa.
[35]
[94]
Regardless,
the Court is enjoined to consider all the interests implicated and
the impact of the irregularity. The question of the
honest exercise
of the statutory function is material to the determination of the
remedy. In this regard, courts have evaluated
the State’s
blameworthiness at various stages of the procurement process: from
when
the
impugned administrative decision-making takes place; at the time of
initiating
review
proceedings; and also
during
the course
of
litigation proceedings. For example, in
AllPay
(2)
the
Constitutional Court deprecated SASSA for adopting a most ‘unhelpful
and almost obstructionist stance’ in the litigation.
[36]
[95]
I
observe it was not out of the City’s volition, but because of
the interdict, that the implementation of the balance of the
unlawful
contract was brought to a halt. Whether the City is genuine, and
driven by an appreciation of its obligation to promote
an open,
responsive, and accountable government or was acting out of
‘
self-interest
of state officials seeking to evade the consequences of their prior
decisions
’
is open to question.
[37]
[96]
The City Manager claims that he was not
aware of the pending review. The Mayor alerted him to the allegations
of irregularities.
Considering that the RFI was issued under his hand
and he thereafter approved the deviation, there was extensive
flouting of the
procurement principles. The scale of the procurement
irregularities reveals a deliberate tender mismanagement, which
proceeded
undetected, and a fundamental weakness in the governance
and procurement process – at huge cost to rate payers. I
conclude
from the papers that:
96.1.
The City Manager approved a Regulation 36
deviation in the procurement process without a validation of the
submissions and representations
made to him;
96.2.
Large irregular payments were made
undetected;
96.3.
Payments were made, in bad faith, while the
application for review was pending and the urgent court proceedings
were underway, effectively
undermining the legal process and the
review;
96.4.
Despite the unlawfulness, contract
parameters set out in the deviation were not adhered to. A subsequent
contract was concluded
without due process and oversight.
96.5.
A
curious issue not raised in the investigation report and by the
parties is that in purporting to conclude a second SLA, the City,
in
clause 5 thereof, provided an adjustment of the contract price based
on a dollar and euro foreign currency exchange. This exposure
to
foreign currency risk was in breach of s 47 of the MFMA
[38]
and was not the basis for the approval of the deviation;
96.6.
Given the dispute of whether TFM is a
supplier of the fire engines and an OEM, there is no objective
assessment by the City of whether
it received value for money for the
procurement and realised the projected costs savings to the value of
R60 703 733.78,
as claimed. It is noteworthy that in terms
of Bid A781, the budget for the procurement of the fleet was
R916 632 000,
including VAT. The budget for the vehicle
managed maintenance services was R255 000 000, including
VAT, yet the City
contracted with TFM at a higher value than had been
projected for Bid A781 without a cogent explanation;
96.7.
For reasons unexplained to the Court, the
mandate and terms of reference provided to the GFIS was limited, and
even though the reports
conclude it could not find evidence of
corruption, it does not reveal processes followed to investigate that
component of the complaint;
96.8.
The City did not make representations on
corrective or remedial measures taken to address the systemic failure
in its procurement
process, taking into account that the collapse of
the tender to procure fire engines was the third of such failures in
the City’s
procurement process.
[97]
I observe that the Mayor stated that he
assumed the position in December 2019. He stated further that he was
briefed about the irregularities
on 23 January 2020. He initiated the
investigation. The submission that the City acted immediately after
receiving the reports
of the irregularities is inconsistent and
difficult to believe. From the papers, media reports surfaced in
November 2019. The report
from the whistle blower surfaced in
December 2019. The City Manager claims he was not aware of the
irregularities until he was
alerted to them by the Mayor. The City
proceeded with an appeal even though it later withdrew it to enforce
the contract. It was
only when public statements made by the Mayor
became known, and the Mayor was joined to these proceedings, that the
City changed
its tune.
[98]
The complaint and impression that the City
was partial towards TFM, imposed time frames that were impossible to
meet, and thereafter
concluded a favourable contract with TFM where
it funded the production of the red fleet is not unfounded.
Significantly, the City
withheld information about the pre-payments,
and failed to disclose these to the urgent court, misrepresenting the
true position.
The versions advanced by the City and TFM altered,
were contradictory, and inconsistent on material aspects throughout
the course
of the litigation. The conduct undermined the
constitutionally guaranteed fair, open, and competitive tender
process. The egregious
nature and extent of the breaches erode
confidence in the governance structure and procurement system.
[99]
TFM
is not an ‘innocent awardee’. TFM made false
representations about its ability to deliver the contract within the
stipulated time period. Having conducted business with the City and
other municipalities over many years, it was no stranger to
public
procurement. It defended the irregular contract and made material
contradictions about the tender and its specifications.
There is no
indication on the facts, or otherwise, that it conducted its own due
diligence and obtained assurance about the legality
of the process it
was participating in. As held in
Special
Investigating Unit & Another v Vision View Productions CC
,
[39]
a reliance on a warranty, which is a standard clause in most
contracts, without more, cannot exempt TFM.
[40]
In the ss 18(2) and (3) application, TFM relied on its 50-year
trading history and relationship with the City, asserting it
did not
require deposits to execute the contract because of its reputation
and relationships with OEM’s and suppliers. Despite
first
contending for the completion of the contract, TFM conceded that in
the light of the concession of irregularity by the City,
it cannot
persist to seek an order to complete the contract.
[100]
The bank letters submitted by TFM to
explain the inability to furnish the guarantee ordered by the Court,
fortify the Court’s
view that TFM falsely misrepresented its
financial standing. It lacked the financial capacity to execute the
tender. It was not
qualified as a bidder. Significantly, TFM
permitted payments to be made to it despite the pending legal
challenge of the contract.
It first denied the payments and withheld
this information from the urgent court. Its conduct throughout the
proceedings displayed
a clear intention
not
to comply with any of the court orders, providing the court with
outdated information to justify the undermining of the court’s
order.
[101]
An important aspect pertains to the
argument about the absence of a finding of corruption, and the
belated efforts to introduce
information pertaining to the impugned
City officials, the NPA, and the SIU. The report allegedly obtained
from the SIU purports
to exonerate the City employees, despite a
finding of a misrepresentation and irregularities by the City’s
investigation.
These attempts miss the mark. The issue is not solely
about ‘the innocence of a tenderer’ on the one side of
the scale
and ‘a corrupt tenderer’ on the other end of
the scale. Even if there is no definitive finding of corrupt conduct,
in my view, the Court must on the facts before it, judge whether the
conduct of the tenderer displays ethical conduct and a commitment
to
principles of good corporate citizenship. It is not essential to
solely rely on proof or inferences of corruption. An entity
the size
and nature of TFM has a social and ethical obligation in terms of the
Companies Act 71 of 2008
to act within the boundaries of the law.
[102]
I
find that TFM knew, or ought to have reasonably known, that the RFI
and the contract were unlawful and irregular. It received
irregular
payments and withheld pertinent information about those payments. It
misled the Court about the payments made. TFM did
not act in good
faith
.
The
principles in
Gijima
,
Buffalo
City
,
[41]
and
Millennium
Waste
[42]
do not find application. An order permitting TFM to complete the
contract would be inconsistent with these findings and undermine
the
law. A disgorgement of all profits, dividends, and increases in
salaries made as a result of the contract is appropriate.
[103]
Marcé argued that the City’s
position regarding the red fleet prevailed since 2015, thus it cannot
escape blameworthiness
for the manner in which it has dealt with
these tenders. The common cause fact is that incidents have
increased. Public interest
considerations demand that the Court deals
with the fact that the red fleet levels are not adequate for the
needs of the City.
The call-out rates to extinguish fires in winter
within the more informal settlements and community where candles,
paraffin and
coal are used have increased. The City had 1 436
callouts in 2014 and 2 407 in 2015. As of February 2019, of the
29 fire
stations, the City could only utilise between seven and nine
fire engines, limiting its ability to respond to emergencies, and
increasing the risk to public lives. Densely populated areas such as
Diepsloot, Lonehill, Bryanston, Midrand, Sandton, Alexandra,
Rosebank, Randburg, and Soweto, amongst others, are underserviced.
These facts are not in contention.
[104]
The cost of the irregularities to the
public purse and the practical consequences of the relief require
equal consideration. Mr
Maenatje (for the City) argued that there is
little prospect that TFM would have the resources to compensate the
City for any loss
that might result if the City cannot receive the
vehicles ordered and already paid for. It would be prejudicial to the
City, the
rate payers, and the residents if the City is not permitted
to retain the 20 vehicles already paid for in full. Other than the
failure to provide the guarantee, which was justified on old letters,
there is no proof that the submission is correct. The City
has not
placed any evidence which shows that it investigated whether there is
recourse to TFM’s overall balance sheet and
business to recoup
the potential losses. An impression created to the Court is that TFM
ring-fenced the execution of the tender
from the balance of its other
operations.
[105]
In my view, the corrective principle, which
demands that the City is placed in a position it would have been but
for the irregularity,
also includes the principle of efficiency.
Fashioning a relief which does not impose a further burden to the
public purse is necessary
and justifiable.
[106]
The WIP presented comprises of incomplete
vehicles with chassis and other equipment retrofitted for the
requirements of the City.
There has been extensive modification to
the vehicles, including shortening and lengthening of the chassis,
rendering these unsuitable
for other purposes. It was not disputed,
nor argued, that there is not a ready market for the vehicles which
were retrofitted for
the bespoke needs of the City. The vehicles,
though partially complete, are available for use to meet the City’s
requirements
as winter approaches. The vehicles have been paid for by
the City. It would exacerbate wasteful expenditure not to utilise the
partly completed vehicles in the interest of the public.
[107]
The balance is in respect of the four
remaining vehicles, and the parts necessary for completion must be
ordered from Finland, Turkey,
and the USA. They have not been paid
for by the City. It is not necessary to expose the City to further
financial risk. It would
undermine the finding of the unlawfulness of
the award to permit TFM to produce and deliver these vehicles.
[108]
An important component not raised by any of
the parties (and the City in particular) are the systemic
institutional remedial and
corrective measures that the City intends
to adopt to address the irregularities and the extent of the
mismanagement of the tender.
The glaring failure renders the
realisation of the protected constitutional principles hollow, and a
mockery given the facts of
this case and the finding that there was
deliberate mismanagement of the tender. In the result, and in view of
the Court’s
wide powers, an order that addresses this
shortcoming is warranted.
[109]
In so far as the costs of the application,
they must follow the result. Fire Raiders submitted it does not seek
a cost order against
TFM and the City. The City and TFM are each
liable for the legal costs incurred by the first and second
applicant.
Accordingly,
I make the following order:
1.
The suspension of the declaration of
invalidity in paragraph 9.3.1 of the court order dated 2 June 2020 is
extended pending the
delivery of the vehicles and compliance with
this order.
2.
The City shall retain for its exclusive use
the 15 Grass Fire Unit vehicles already paid for and delivered by
TFM.
3.
In addition to the vehicles in paragraph 2
above, TFM shall procure the registration of: -
(a)
2 x Level 2 incident command vehicles;
(b)
2 x heavy duty air trucks; and
(c)
1 x hazmat vehicle
being
the five additional vehicles ready for delivery currently under its
custody and control, and deliver same to the City within
20 days of
this order.
4.
Within 60 days of the order, being the
order dated 29 March 2021, TFM shall deliver to the City the 20
vehicles already paid
for by the City, identified as the: -
(a)
5 x Heavy Duty Rear Mount Pumpers;
(b)
7 x Light Rapid Fire and Rescue
Intervention Units;
(c)
4 x Water Tankers;
(d)
2 x Industrial Pumpers; and
(e)
2 x Heavy Duty Rescue Units.
5.
The remainder of the contract comprising: -
(a)
1 x Telescopic Aerial Ladder;
(b)
2 x Major Pumpers; and
(c)
1 x Hydraulic Platform
being
the vehicles ordered but not paid for by the City, is legally
invalid, cancelled, and forfeited forthwith.
6.
The balance of the contract comprising 48
vehicles is legally invalid and terminated forthwith. The City and
TFM are prohibited
from reviving the contract in any form whatsoever
other than through a transparent lawful tender process.
7.
All profits, dividends, or bonuses paid to
TFM’s shareholders and/or directors, if any, arising from the
contract shall be
forfeited forthwith and paid back to the City
within 60 days of this order.
8.
TFM shall ensure that the 15% increase in
monthly salaries and payments made to TFM directors, arising from the
contract, is returned
to the City within 60 days of this order.
9.
TFM is directed to procure and file an
affidavit and a report by an independent auditor within 65 days of
this order: -
(a)
Confirming the delivery of the vehicles in
paragraphs 3 and 4 above and the compliance with the orders in
paragraph 7 and 8 above;
(b)
Confirming the accuracy of the information
disclosed in its Schedule LS8 and LS9 (CaseLines reference D2143 &
D2145) filed on
19 June 2020;
(c)
Detailing any other profits, dividends
and/or bonuses paid to its shareholders and directors arising from
the contract; and
(d)
Furnish to the Court its audited financial
statements and management accounts for the relevant financial year.
10.
The City is directed to comply with the
Supply Chain Policy and to: -
(a)
Investigate whether the
Regulation 36
deviation resulting in the award of the contract to TFM was as a
result of poor planning or procrastination on the part of the
City’s
officials;
(b)
Make a declaration in respect of the above,
as is required in terms of the supply chain policy;
(c)
Identify and classify whether it incurred
an irregular expenditure in terms of the contract as required in
terms of the supply chain
policy and applicable legislation; and
(d)
Present to the Court its findings within 30
days of this order.
11.
In addition, the City is ordered to present
to the Court the remedial and corrective measures it has taken to
prevent the future
deliberate mismanagement of the tender and
irregular procurement and the steps it has taken to implement the
recommendations in
the investigation report within 30 days of this
order.
12.
The Registrar is directed to refer all the
affidavits deposed to by Mr Mlonzi, Mr Savage, Mr Else, and Mr
Magoasha, dealing
with the pre-payments made by the City to TFM, to
the National Director of Public Prosecutions (NDPP) to investigate
whether there
are grounds to charge all or any of them with perjury,
and, if so, take the necessary steps to prosecute them for same.
13.
The City and TFM are ordered to pay the
costs of the first applicant, jointly and severally, the one paying
the other to be absolved.
14.
The second applicant and third applicant
shall bear their own costs.
T
SIWENDU
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
This
revised judgment was handed down electronically by circulation to the
parties’ and/or parties’ representatives
by email and by
being uploaded to CaseLines. The date and time for hand-down is
deemed to be 10h00 on
12 April 2021.
Date
of hearing:
18-19 March 2020
28 May 2020
22-23 October 2020
Further
written submissions:
2 November 2020
10 November 2020
30 November 2020
Date
of judgment:
29 March 2021
Appearances:
Counsel
for the first and second applicants:
K Pillay SC; Y Ntloko
Attorney
for the first and second applicants:
Dlamini Attorneys
Counsel
for the third applicant:
A Bava SC
Attorney
for the third applicant:
ST Attorneys
Counsel
for the first respondent:
N Maenetje SC; M Sello
Attorney
for the first respondent:
Mkhabela Huntley Attorneys Inc
Counsel
for the second respondent:
L Hollander
Attorney
for the second respondent:
Thomson Wilks Inc
[1]
GN
868 of 30 May 2005: Municipal Supply Chain Management Regulations as
amended by R.31 GG 40553 of 20 January 2017. The
Regulations
were made in terms of
s 168
of the
Local Government: Municipal
Finance Management Act 56 of 2003
. The Regulation 36(1) procurement
process applies in cases of extreme urgency and for contract of a
lesser value. It provides
as follows:
‘
36.
Deviation from, and ratification of minor breaches of, procurement
processes
(1)
A supply chain management policy may allow the accounting officer—
(a)
to dispense with the official procurement processes established by
the policy and to procure any required goods or services
through any
convenient process, which may include direct negotiations, but only-
(i)
in an emergency;
…
(v)
in any other exceptional case where it is impractical or impossible
to follow the official procurement processes; ...’
[2]
Section
172(1)(b) of the Constitution provides:
(1)
When deciding a constitutional matter
within its power, a court—
(b)
may make any order that is just and
equitable, including—
(i)
an order limiting the retrospective effect
of the declaration of invalidity; and
(ii)
an order suspending the declaration of
invalidity for any period and on any conditions, to allow the
competent authority to correct
the defect.
[3]
He
also deposed to an affidavit opposing the interdict before Modiba J.
See the judgment of Modiba J in respect of the application
for an
urgent interim interdict in
Marcé
Projects (Pty) Ltd and another v City of Johannesburg Metropolitan
Municipality and another
[2019]
ZAGPJHC 540;
[2020] 2 All SA 157
(GJ), dealt with later in the
judgment.
[4]
Mr
Mlonzi also deposed to the affidavit on behalf of TFM opposing the
interdict before Modiba J.
[5]
Ms
Sago acted in her capacity as Legal Advisor (Group Legal and
Contracts).
[6]
Clauses
3 and 8.4 of the Business Relationship and Service Level Agreement
contracts TFM to supply 92 specialised fire rescue
vehicles
comprising of the following:
Heavy
Duty Rescue Unit x 2; Industrial pumper x 2; Heavy Duty Air Truck
x4; Telescopic Aerial Ladder x4; Heavy Duty Hazmat vehicle
x 2;
Grass Fire Vehicle x 15 Major pumper x 20; Water tanker x 12; Light
Rapid Fire and Rescue Intervention vehicle x 7; Prime
mover x 1;
Hydraulic Platform x 4; Level Two Incident Command vehicle x2; Heavy
Duty Rear Mount Pumper x 15.
[7]
Regulation
16A6.4 reads, ‘If in a specific case it is impractical to
invite competitive bids, the accounting officer or
accounting
authority may procure the required goods or services by other means,
provided that the reasons for deviating from
inviting competitive
bids must be recorded and approved by the accounting officer or
accounting authority.’
[8]
The
hearing was adjourned to 28 May 2020, and the Court considered
affidavits by Mr Makhubo, accompanied by affidavits by Dr
Ndivhoniswani Lukhwareni, the City Manager, Mr Mogashoa, the City’s
Group Head: Legal and Contracts, and Mr Monageng, the
Acting Chief:
Emergency Management Services.
[9]
A
pertinent aspect of the Court’s order was that at paragraphs
9.3.3 and 9.3.4 the second respondent was ordered to provide
an
irrevocable and unconditional bank guarantee (payable upon the order
of this court) in favour of the first respondent in the
amount of
R134 380 700.52 being the pre-payment received under the
contract for which no vehicles were delivered, alternatively,
an
irrevocable indemnity in favour of the City of Johannesburg,
exercisable upon the order of the Court from the second respondent’s
risk insurers.
[10]
This
position accorded with the reading of the RFI, but not the City’s
subsequent actions.
[11]
The
record reveals and records that EAC members inquired into the
amounts budgeted for the tender to procure fire and rescue vehicles
that was cancelled. In addition, they interrogated how the City was
going to make savings of R300 000 000 from the
procurement
of fire engines and vehicles. The record notes that the current
specifications on the procurement of fire and rescue
vehicles
through the deviation were similar to the specifications of the
cancelled tender. They also interrogated whether the
fire engines to
be procured would be readily usable with the required equipment.
They directed that the department should demand
that the service
provider submit a performance guarantee of 20% of the contract
value, in favour of the City. They also directed
that the service
provider’s three years’ of financial statements should
be analysed to verify if the service provider
is financially sound
and that a contingency of 10% of the value of the procurement
(contract) be approved and its utilisation
should not be done
without prior approval of the City Manager.
[12]
Examples
of non-compliance pertained to firefighting hoses for the Heavy Duty
Rear Mount Major Pumper; TFM offered 38 mm and 65
mm rubber with BIC
while the City required a standardised on double jacket with NST
couplings. Miscellaneous equipment for the
Grass Fire Units required
was excluded in the SLA; the chassis offered for the Heavy Duty Rear
Mount Major Pumper and Industrial
Pumpers was a single-cab with a
capacity for two occupants rather than a double-cab with capacity
for six occupants.
[13]
The
failure to supply a security bond or an approved guarantee was
considered a material breach of the contract under the Bid
A781
tender process.
[14]
The
Minutes of the EAC dated 18 June 2019 and the letter of appointment
dated 5 July 2019.
[15]
‘
8.12
Performance Bond
8.12.1
The Contractor to provide performance bond. The Contractor shall
provide a performance bond equal to the amount of the
outstanding
contract value provided by a registered South African financial
institution reasonably acceptable to the Contract
Owner, for the due
performance of the Contractor’s obligations in terms of this
Agreement. It is recorded that the cost
of this bond shall be
charged by the Contractor to the User Entity.
8.12.2
Bond Amount. it is recorded that the maximum bond amount is not to
exceed 20% (twenty percent) of the financial obligation
that the
Contractor is indebted to the Contract Owner, and that the Contract
Owner may, in its discretion, reduce the amount
of the performance
bond required over the term of the Agreement relative to Contract
Owner's exposure. For clarity, the bond
amount shall equal no more
than the total contract amounts pre-paid to the Contractor.’
[16]
Clause
4 of the July SLA provides: ‘This Agreement commences on the
Signature Date and continues for a period of 3 (three)
months or in
accordance to the agreed delivery schedule.’
[17]
The
hearing of the application was set to resume on 16 September 2020
and had to be adjourned due to an overlap in the Court’s
schedule. Even though dated 14 September 2020, the report had not
yet been made available to the Court.
[18]
The
Court admitted the affidavit because the matters addressed were
envisaged in the order of 2 June 2020.
[19]
On
16 October TFM filed a supplementary affidavit and on 2 November it
filed ‘replying submissions’, followed by further
similar submissions on 30 November 2020. On the other hand, Fire
Raiders filed a ‘conditional affidavit’ and further
submissions on 10 November 2020.
[20]
The
total record from the urgent application to the finalisation of the
review was almost 7 000 pages.
[21]
Section
8(1) of the PAJA reads: ‘The court or tribunal, in proceedings
for judicial review in terms of section 6(1), may
grant any order
that is just and equitable, including orders —
(a)
directing
the administrator — (i) to give reasons; or (ii) to act in the
manner the court or tribunal requires;
(b)
prohibiting
the administrator from acting in a particular manner;
(c)
setting
aside the administrative action and (i) remitting the matter for
reconsideration by the administrator, with or without
directions; or
(ii) in exceptional cases —
(aa)
substituting
or varying the administrative action or correcting a defect
resulting from the administrative action; or
(bb)
directing
the administrator or any other party to the proceedings to pay
compensation;
(d)
declaring
the rights of the parties in respect of any matter to which the
administrative action relates;
(e)
granting
a temporary interdict or other temporary relief; or
(f)
as
to costs.’
[22]
AllPay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others (No 2)
[2014] ZACC 12
;
2014 (4) SA 179
(CC) referred to as ‘
AllPay
(2)
’
para 30.
[23]
See
Mwelase
and Others v Director-General for the Department of Rural
Development and Land Reform and Another
[2019]
ZACC 30
;
2019 (6) SA 597
(CC)
para
65, with reference to
Electoral
Commission v Mhlope
[2016]
ZACC 15
;
2016 (5) SA 1
(CC) para 83.
[24]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
[2006] ZACC 16
;
2007 (3) SA 121
(CC) para 29; cited in
AllPay
(2)
(note
22 above) para 29.
[25]
AllPay
(2)
(note
22 above) para 32.
[26]
AllPay
(2)
(note
22 above) para 67; see, for example, the order in
State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
[2017]
ZACC 40
;
2018 (2) SA 23
(CC) (‘
Gijima
’)
para 54, preserving the existing contractual rights of the innocent
contractor up until the declaration of invalidity.
[27]
Millennium
Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo
Province and Others
[2007] ZASCA 165
;
2008 (2) SA 481
(SCA) para 23.
[28]
Bengwenyama
Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and
Others
[2010] ZACC 26
;
2011 (4) SA 113
(CC) para 85.
[29]
Ibid
para 84.
[30]
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
t/a Eye Lazer Institute
[2014] ZACC 6
;
2014 (3) SA 481
(CC) para 82.
[31]
Ibid.
[32]
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Limited
[2019] ZACC 15
;
2019 (4) SA 331
(CC) para 99.
[33]
Ibid
para 105.
[34]
Bengwenyama
(note
28 above) para 85.
[35]
Swifambo
Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa
[2018] ZASCA 167; 2020 (1) SA 76 (SCA).
[36]
AllPay
(2)
(note 22 above) para 75.
[37]
Buffalo
City
(note 32 above) para 120 (minority judgment).
[38]
Section
47 of the MFMA provides:
‘
Conditions
applying to both short-term and long-term debt
A
municipality may incur debt only if-
(a)
the debt is denominated in Rand and is not indexed to, or affected
by, fluctuations in the value of the Rand against any foreign
currency; and
(b)
section 48 (3) has been complied with, if security is to be provided
by the municipality.’
[39]
Special
Investigating Unit & Another v Vision View Productions CC
(A5018/2019) [2020] ZAGPJHC (19 June 2020).
[40]
Ibid
paras 75-79. The respondent (who had been awarded the tender
irregularly) argued that it was an innocent party in the awarding
of
the contract – it pleaded ignorance as to the internal
procurement processes of the SABC, relying on a lack of experience
in servicing the public sector. It also sought to rely on a warranty
clause contained in the contract, which provided that the
SABC was
authorised to enter into the contract.
The
Full Bench was not convinced that the respondent was the innocent
tenderer it purported to be. It found that the respondent
had
adopted a supine approach to the procurement processes, and found it
inconceivable that a business operating on the scale
of the
respondent would be ignorant of the basic tenets of public
procurement processes.
[41]
Where
the Constitutional Court held that the contract awardee should
neither benefit, nor be worse off, as a result of the declarations
of unlawfulness.
[42]
The
innocent contract awardee would nevertheless be permitted to ‘claim
all moneys that would properly have been due to
it but for [the
setting aside order] on that date and to retain all moneys that were
properly paid to it at that date’.