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[2010] ZAGPPHC 51
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Aurobindo Pharma (Pty) Ltd v Chairperson, State Tender Board and Others (59309/2008) [2010] ZAGPPHC 51 (27 May 2010)
I
N
THE HIGH COURT OF SOUTH AFRICA
/ES
(
NORTH
GAUTENG HIGH COURT. PRETORIA
)
CASE
NO: 59309/2008
DATE:
27/05/2010
IN
THE MATTER BETWEEN
AUROBINDO
PHARMA (PTY) LTD APPLICANT
AND
THE
CHAIRPERSON, STATE TENDER BOARD 1
st
RESPONDENT
STATE
TENDER BOARD 2
nd
RESPONDENT
THE
CHIEF DIRECTOR. CONTRACT
MANAGEMENT,
NATIONAL TREASURY 3
rd
RESPONDENT
MINISTER
OF FINANCE
4
th
RESPONDENT
MSD
(PTY) LTD 5
th
RESPONDENT
ADCOCK
INGRAM HEALTHCARE (PTY) LTD 6
th
RESPONDENT
PHARMACARE
LIMITED t/a ASPEN PHARMACARE 7
th
RESPONDENT
JUDGMENT
PRINSLOO,
J
[1]
This was an application to review and set aside the awarding of a
certain tender no RT71/2008MF by the 2
nd
respondent to the 5
th
,
6
th
and
7
tln
respondents.
[2]
The applicant was an unsuccessful tenderer. There were also other
unsuccessful tenderers.
[3]
The tender involved the supply of various antiretroviral drugs for
end-use by the Department of Health.
[4]
The users of these antiretroviral drugs would be the Minister of
Defence, the Minister of Correctional Services and the Members
of the
Executive Council: Health Services of all the Provincial Governments
("the participating Departments").
[5]
At the commencement of the proceedings before me, Mr Reyneke SC, who
appeared for the applicant, informed me that the applicant
was no
longer proceeding with the review application, but was only asking
for a costs order against the 3
rd
and 4
th
respondents on the basis that the challenge against the award was
good in law in the first place. I shall revert to the arguments
as to
costs in greater detail hereunder.
The
reason for the applicant's decision not to proceed with the
application
[6]
The tenders were awarded on the basis that the successful
tenderers would supply
various
antiretroviral drugs, as illustrated, for the period 1 June 2008 to
31 May
2010.
[7]
The application came before me on 28 April 2010 after the Deputy
Judge-President, some time ago, had allocated 28 and 29 April
for the
hearing of the matter as a special motion application. This meant
that, on the date of the hearing, there was only approximately
one
month left for the tender period to run its course. In that sense,
the application had, for practical purposes, become moot.
Although
the application did not come before me in the form of an appeal, so
that section 21A of the Supreme Court Act 59 of 1959
does not apply,
it is useful, in this regard, to have regard to the recent, as yet
unreported, Supreme Court of Appeal judgment
of
R
MR
Commodity Enterprise CC t/a Krass Blankets
v
The
Chairman of the Bid Adjudication Committee and Five Others
(092/08)
[2009] ZASCA 2
(20 February 2009).
[8]
Moreover, if the tender awards were to be set aside, with the full
period not yet having run its course, such an order could
have
serious and prejudicial results, not only for the successful
tenderers, but also for the public, and, more particularly, the
antiretroviral drug consuming patients of the participating
Departments.
In
this regard, it is useful to quote an extract from the opposing
affidavit filed on behalf of the 6
tl1
respondent in August 2009:
"21.
Second, a decision to review and set aside the tender award would
have disastrous consequences for the members of the
public who depend
on state institutions for their antiretroviral treatment.
21.1
It would mean that there is no supply in place to the state for the
various antiretroviral medicines concerned.
21.2
... I point out that while Aspen (my note: the 7
th
respondent)
speaks of providing antiretroviral treatment to approximately 500 000
to 650 000 people pursuant to this tender, Adcock
Ingram (my note:
the 6
th
respondent) is providing antiretroviral treatment to approximately
280 000 to 300 000 people.
22.
Third, it should be noted that pursuant to having been awarded
the tender, Adcock Ingram has invested enormous sums of money
in both
equipment and personnel in order to fulfill its obligations and
consistently supply this product to Government, to ensure
patient
compliance and to avoid compromising patient health. 22.1 For
example, Adcock Ingram has embarked on an enormous
capital
investment program in its factories that manufacture antiretrovirals.
In this regard it has been awarded a Government
tax incentive grant
of R458 million to upgrade its factory under the Department of Trade
and
Industry's
Strategic Industrial Projects and has currently spent approximately
R611 million in this regard.
22.2
Adcock has adopted strategies, at great cost to it, to ensure that
appropriate inventory levels of the antiretrovirals are
available ...
22.3
If the tender award is reviewed and set aside, substantial portions
of this expenditure would be unrecoverable. Moreover, the
equipment
purchased in the factory for antiretroviral manufacture at a cost of
R25 million will be left idle and it is probable
that retrenchments
will follow."
[10]
The 6
lh
respondent also make the point, in paragraph 20 of its answering
affidavit, that setting aside of the awards would have a very
limited
benefit for the applicant because of the approaching termination date
of the tender period.
[11]
The 7
th
respondent, in its answering affidavit, echoes most of these
sentiments, but also makes telling submissions about the interests
of
the drug consuming patients themselves:
"18.5
I respectfully submit, therefore, that providing life saving
treatments, such as antiretrovirals is always preferable
to delaying
it. This will not be the case should the applicant be awarded the
relief that it seeks.
18.6
I also point out that one of the risks associated with the
interruption of an HIV/AIDS antiretroviral program is the spectre
of
virus mutation, resistance, and viral immunity to the drugs. In the
context of the HIV pandemic, this is a risk that can never
be
tolerated. In the greater context of HIV, there are very few drugs
available as treatment options and resistance/treatment immunity
poses a highly significant threat to the effectivity of these drugs.
Interruption of treatment leads directly to resistance and
treatment
immunity. Given the potential spread of HIV, this is a problem that
has implications not only in South Africa but worldwide
…"
[12]
The 7
th
respondent makes other compelling submissions about health issues
flowing from the interruption of the treatment which I deem
unnecessary to repeat for purposes of this judgment.
[13]
The Supreme Court of Appeal has now repeatedly held that, in
appropriate circumstances, a court has a discretion to decline
to set
aside an administrative act even if it was invalid.
In
Chairperson,
Standing Tender Committee and Others v J F E Sapela Electronics (Pty)
Ltd and Others
2008
2 SA 638
(SCA) the learned Judge of Appeal says the following at 649J
paragraph [28]:
"In
appropriate circumstances a court will decline, in the exercise of
its discretion, to set aside an invalid administrative
act. As was
observed in
Oudekraal
Estates (Ply) ltd
v
City
of Cape Town
2004
6 SA 222
(SCA) paragraph [36] at 246D:
'It
is that discretion that accords to judicial review its essential and
pivotal role in administrative law, for it constitutes
the
indispensible moderating tool for avoiding or minimising injustice
when legality and certainty collide.'
A
typical example would be the case where an aggrieved party fails to
institute review proceedings within a reasonable time ...
In the
present case, as I have found, there was no culpable delay on the
part of the respondents. But the object of the rule is
not to punish
the party seeking the review. Its
raison
d'etre
was
said by BRANDT, JA in
Associated
Institutions Pension Fund & Others v Van Zyl & Others
2005
2 SA 302
(SCA) in paragraph [46] to be twofold:
'First,
the failure to bring a review within a reasonable time may cause
prejudice to the respondent. Secondly, there is a public
interest
element in the finality of administrative decisions and the exercise
of administrative functions.'
Under
the rubric of the second I would add considerations of pragmatism and
practicality."
See
also
Millennium
Waste Management (Pty) Ltd
v
Chairperson,
Tender Board: Limpopo Province & Others
2008
2 SA 481
(SCA) at paragraph [23],
See
also the, as yet unreported, judgment of the Supreme Court of Appeal
in
Moseme
Road Construction CC v King Civil Engineering CC
(385/2009)
[2010] ZASCA 13
(15 March 2010) paragraphs [19], [20] and [21].
[14]
For all these reasons, the present case, given the particular
circumstances as illustrated, is one which, in my view, would
have
attracted the result of the court exercising its discretion not to
set aside the administrative action, even if it was found
to have
been invalid.
If
I understood Mr Reyneke correctly, it is for this reason that the
decision was taken to abandon the application.
[15]
In order to meaningfully consider the arguments as to costs,
supra,
it
is incumbent upon me to pronounce upon the validity of the
administrative act of disqualifying the applicant from the tender
process.
Was
the tender process flawed and invalid
?
[16]
In terms of the conditions of the invitation to tender all tenders
were to be evaluated with reference to a preference points
system as
contained in the "Preferential Procurement Regulations 2001".
[17]
The Special Conditions applicable to the tender process provides that
"the bidder obtaining the highest number of points
will be
awarded the contract".
[18]
In terms of these regulations and the "Special Requirements and
Conditions of Contract", both of which were referred
to and
contained in the tender documents, points were to be scored on a 100
points system, with 90 points allocated to price, 1
point being
scored if the tenderer qualifies as "historically disadvantaged
individuals" or "HID" and 9 points
for local
manufacturing.
[19]
The founding affidavit contains a comparison between the points that
should have been scored by the applicant and the comparative
points
that should have been allocated to the successful tenderers.
[20]
Based on this comparison, it appears to be probable that, if the
point scoring system had been correctly applied, the applicant
could
have been awarded the tenders in respect of each of the products
tendered for, in that its tendered prices were significantly
lower
than the prices of its competitors. Had this happened, the tax payer
may also have been saved a considerable amount of money.
[21]
It appears that the Bid Adjudication Committee evaluated the bids on
6 May 2008. According to the 3
rd
and 4
th
respondents' answering affidavit the applicant's bid was regarded as
"unresponsive" and non-compliant with the provisions
of
clause 7(a) of the Special Conditions. In the result, the applicant
was disqualified.
[22]
The applicant was only informed on 25 June 2008 that its tender was
not successful.
[23]
On or about 9 July 2008 representatives of the applicant met with,
amongst others, the Director. Contract Management of National
Treasury to discuss the unsuccessful bid. According to an allegation
in the founding affidavit, no "cogent reason" was
furnished
by the authorities as to the reason for the disqualification of the
bid.
[24]
In terms of the Promotion of Administrative Justice Act, 3 of 2000
("PAJA") the applicant requested reasons for the
decision
to award the tender to the 5
Ih
,
6
Ih
and 7
th
respondents and not to the applicant. The reasons were requested
within ninety days after the applicant became aware of the decision,
and the time within which a response was to be supplied in terms of
PAJA expired on 20 November 2008.
[25]
No formal response was received. In terms of section 5(3) of PAJA
there is a presumption, subject to certain other conditions
as set
out in section 5(4), that if an administrator fails to furnish
adequate reasons for an administrative action it is presumed
that the
action was taken without good reason.
[26]
These proceedings were instituted on or about 22 December 2008, and
within the period of 180 days prescribed in terms of section
7(1) of
PAJA.
[27]
On a general reading of all the papers, including the opposing
affidavits, I find no basis for concluding that there was an
undue
delay on the part of the applicant in launching this application.
[28]
It is also common cause that there was no question of misconduct or,
for example, fraudulent behaviour on the part of the applicant
when
presenting its tender.
[29]
With reference to my earlier remark that the Special Conditions
provide that the bidder obtaining the highest number of points
will
be awarded the contract, it should be added, in fairness and for the
sake of detail, that section 2.1(b) of the Special Conditions
records
that-
"A
contract may, on reasonable and justifiable grounds, be awarded to a
bid
that did not score the highest number of points." In my view,
this particular provision does not come into play for present
purposes.
[30]
I now turn to the reason offered by the authorities (in this case the
1
st
,
2
nd
and 3
rd
respondents)
for disqualifying the applicant's tender bid. It is contained in a
letter written to the applicant's attorney by the
State Attorney,
dated 19 November 2008 in response to an earlier letter written by
the applicant's attorney. Technically, this
letter would have served
as an answer to the request for reasons in terms of
PAJA,
supra,
and
would also, in my view, nullify any presumption which may have arisen
in terms of section 5(3) of PAJA,
supra.
Nothing
turns on this.
[31]
It is convenient to quote the contents of the letter:
"1.
The bid that was submitted by your client Aurobindo Pharma (Pty) Ltd
was received and evaluated by the Evaluation Committee.
Although your
client offered the lowest price in some products, as stated in your
letter under reply, it, however, failed to submit
a letter from the
manufacturer confirming a firm supply of the items offered by your
client.
2.
Clause
7(a) of the Special Conditions provides that
'In
the event of the bidder not being the actual manufacturer and will be
sourcing the product(s) from another company, a letter
from that
company(ies)/supplier(s) confirming firm supply arrangements,
including lead times in this regard, must accompany your
bid at the
closing date and time.'
3.
Clause 7(j) provides that,
'Non-compliance
with the abovementioned Special Conditions will invalidate the bid
for such products offered.'
4.
Upon perusal of documents submitted by your client nowhere in the bid
documents did your client indicate that it is a manufacturer
of the
products in question. Instead when it completed the bid forms it
claimed no preference points for the local manufactured
products.
Furthermore when responding to the question of whether it is an
actual manufacturer or authorised importer? your client
simply
answered 'yes'. This answer does not indicate whether your client is
a manufacturer or an authorised importer. Therefore
the insertion of
'yes' was meaningless. This alone does not indicate whether your
client is an authorised importer or manufacturer.
5.
On further perusal of the documents, an impression was created that
your client imports the items from a manufacturer in India.
6.
Therefore your client did not comply with the requirements of the
aforementioned special condition and as a result thereof your
client's bid was disqualified."
[32]
It is common cause that the applicant was not the manufacturer but
the authorised importer of the drugs on behalf of a mother
company in
India which is the manufacturer.
[33]
Counsel for the applicant submitted that the provisions of Special
Condition 7(a),
supra,
should
be considered in conjunction with the questions posed in respect of
the relevant subject as also described in the letter
from the State
Attorney. The question is framed as follows:
"Are
you the actual manufacturer or authorised importer? [Yes ] [No]
If
answered no
,
did you include a letter from the manufacturer or authorised
importer?" (Emphasis added.) [Yes ][ No ]
[34]The
applicant ticked the "yes" block in response to the first
question because it is the authorised importer.
[35]
Because the applicant did not answer "no", it did not
answer the second question, neither was a letter supplied as
intended
by the provisions of clause 7(a).
[36]
In the covering letter, enclosing the bid documents, the applicant
also indicated in writing that deliveries will be executed
within 42
days of receipt of the order - see the wording of Special Condition
7(a) with regard to "lead times".
[37]
It was argued on behalf of the applicant that on a proper
construction of the question a letter is only required if the bidder
is neither the manufacturer nor the authorised importer. The
applicant, correctly, responded to this question by ticking the "yes"
block since it is the authorised importer and its response cannot be
regarded as "meaningless" as suggested in the letter
of the
State Attorney. I agree that the questions, as posed in the
documentation, are misleading. In my view, it would have been
far
more sensible to ask the tenderer to specify whether it is either the
manufacturer or the importer and, secondly, if it had
specified that
it was not the manufacturer, to enquire whether the letter prescribed
in terms of clause 7(a) had been included.
Indeed, the question, as
posed, namely "Did you include a letter from the manufacturer or
authorised importer?" makes
no sense because clause 7(a) does
not require a letter from the importer but only from the
manufacturer.
[38]
What adds to the confusion, is the fact that the two questions posed,
as quoted and discussed, seem to appear in the invitation
bid as a
specimen "questionnaire per item" (record p65) whereas the
actual form completed by the applicant and to which
Mr Reyneke
referred me (record p211) does not even contain the second question
but only the first question "Are you the actual
manufacturer or
authorised importer?" and it was, as already stated, answered in
the affirmative.
[39]
I express no firm view as to whether the applicant should not in any
event have attached a letter from the manufacturer in
terms of clause
7(a). I do, however, agree with the submission on behalf of the
applicant that, at worst for the applicant, the
questions referred
to, read with clause 7(a), are ambiguous and create confusion which,
if not responded to in a satisfactory manner,
should have prompted
the Bid Adjudication Committee to seek clarification rather than to
disqualify the bid as unresponsive.
[40]
I consider this submission to be particularly valid in view of the
fact that the 5
th
respondent, in its bid, also failed to comply with a condition that
could invalidate its bid in terms of Special Condition 5,
infra,
but
was afforded an opportunity to rectify the mistake before 6 May when
the evaluation took place.
[41]
The 5
th
respondent indicated that it was abiding by the decision in this
matter and did not file an opposing affidavit. Nevertheless, the
non-compliance by the 5
lh
respondent is one of the main issues on which the applicant's attack
on the validity of the process is based.
[42]
T turn to the non-compliance by the 5
th
respondent and the manner in which it was allowed to rectify the
mistake before the evaluation took place on 6 May 2008.
[43]
Special Condition 5 of the contract reads as follows: "5.
Response Fields
It
is imperative that bidders submit responsive bids by completing all
the mandatory response fields and item questionnaires for
the
individual items. In this regard bidders' attention is drawn to the
response field and price structure explanations and examples
supplied
in the bid document.
Non-compliance
with this condition will invalidate the bid for the item/s
concerned."
[44]
The "response fields" are listed in a specific document
with space left for the particular item to be completed.
Included
in the list one finds the following four items:
"Foreign
currency [mandatory] American dollars. Foreign exchange rate
[mandatory] 1. Import percentage [mandatory]. Minimum
order quantity
[mandatory]."
[45]
It is common cause that the 5
lh
respondent failed to provide the particulars relating to these four
items or even to complete the form at all in so far as these
items
are concerned. This, as per Special Condition 5, would have led to
the bid being invalidated.
However,
on 21 April 2008, and well before 6 May, the Director, Contract
Management, National Treasury, Ms Sizi Qolohle, wrote the
following
letter to the financial director of the 5
lh
respondent:
"RT71
- 2008 MF: The supply of anti retro viral drugs for the period 1 June
2008
to 31 May 2010.
Sir
it is mentioned in our Special Conditions document that the bidder is
required to complete all the mandatory fields when submitting
your
bid, page 4 of paragraph 5.The following mandatory information has
not been complete:
foreign
currency
foreign
exchange rate
•
import
percentage
•
minimum
order quantity.
Contract
management request that you indicate your response in writing.
Please
respond before end of business today.
Yours
sincerely
Sizi
Qolohle Director
Contract
Management National Treasury Date: 21/04/2008."
On
the same date this letter was telefaxed to the 5
lh
respondent and in a letter dated 22 April 2008 the financial director
of the 5
lh
respondent, Mr Chandler, wrote a letter to Ms Qolohle in the
following terms and under the same heading
:
"Sir/Madam
As
requested attached please find the bid documents with all mandatory
fields completed.
Yours
sincerely
Mark
Chandler
Finance
Director
MSD
(Pty) Ltd."
Attached
to this letter one finds six printed forms duly completed with the
required particulars that were omitted when the tender
was lodged.
[46]
In the event, of course, the 5
th
respondent was not disqualified but became one of the successful
tenderers.
[47]
In the supplementary affidavit filed by the applicant in terms of
rule 53 after the record had been obtained and studied, reference
is
made to this favourable treatment meted out to the 5
th
respondent and it is submitted in the supplementary affidavit on
behalf of the applicant that this conduct justifies the inference
that the applicant was singled out and treated to different standards
as other bidders and/or that the 5
th
respondent was singled out for special favourable treatment. It is
submitted in this supplementary affidavit that this discrimination
against the applicant and the favourable treatment of the 5
th
respondent contaminated the entire process. It is also submitted in
the supplementary affidavit that if the applicant had been
afforded
the opportunity, it would allay any fears or uncertainty that could
exist in regard to its ability to ensure a secure
supply of all the
products and it would have provided the authorities with the letter
as intended by the requirements of Special
Condition 7(a).
[48]
In their answering affidavit, the 3
rd
and 4
lh
respondents make the interesting revelation that, after the applicant
had been disqualified, the 5
th
respondent was the only remaining tenderer offering this particular
drug and it was necessary to ensure that the award was made.
The
deponent on behalf of the 3
rd
and 4
th
respondents
puts it as follows:
"During
the evaluation it was noted that the 5
th
respondent omitted to indicate the foreign currency that was going to
be applied during contract price adjustment. Efivarenz is
supplied in
three different formulations being 50mg, 200mg and 600mg. It was also
noted that the 5
th
respondent was the only bidder that had tendered for Efivarenz 200mg
after the applicant was disqualified. As the 5
th
respondent was the only bidder that had tendered for Efivarenz 200mg
it became necessary to ensure that this formulation is awarded.
For
this reason the bid document had to be scrutinised as to whether the
missing information was material as to the price of the
drug
concerned."
The
deponent also says the following in paragraph 17 of the answering
affidavit: "Furthermore regard being had to the fact
that the
5
lh
respondent had no competitor in the formulation concerned (the
applicant having been disqualified) it was in the public interest
that that formulation should be awarded and accordingly government
could not have afforded to postpone the award."
The
deponent also offers another argument, which I find unconvincing,
namely that the information omitted by the 5
th
respondent was not material to the evaluation of the bid nor was it
material to the validity thereof as the price is the determining
factor as to whether or not the bid should be accepted. The deponent
points out that the information could also have been requested
after
the award had been made. The deponent also appears to play down the
omission by suggesting that it only involves one missing
response
field, whereas, indeed, there were four mandatory response fields
missing, as illustrated. The argument adopted about
materiality is
also at odds with the clear provision in Special Condition 5 that
non-compliance "will invalidate the bid for
the item/s
concerned".
[49]
In the case of
Metro
Projects CC v Klerksdorp Local Municipality
2004
1 SA 16
(SCA) it appears that one of the tenderers was also given an
opportunity of augmenting its tender to improve its chances of
acceptance.
In
the judgment, at 21A-C, the learned Judge of Appeal points out that
section 3(2)(a) of PAJA requires the process to be lawful,
procedurally fair and justifiable. The learned judge refers to the
case of
Logbro
Properties CC v Bedderson NO & Others
2003
2 SA 460
(SCA).
I
find it convenient and informative to quote paragraphs [13] and [14]
at 21C-G:
"[13]
In the
Loghro
Properties
case
supra,
paras
[8] and [9] at 466H-467C, CAMERON JA referred to the 'ever-flexible
duty to act fairly' that rested on a provincial tender
committee.
Fairness must be decided on the circumstances of each case. It may in
given circumstances be fair to ask a tenderer
to explain an ambiguity
in its tender; it may be fair to allow a tenderer to correct an
obvious mistake; it may, particularly in
a complex tender, be fair to
ask for clarification or details required for its proper evaluation.
Whatever is done may not cause
the process to lose the attribute of
fairness or, in the local government sphere, the attributes of
transparency, competitiveness
and cost-effectiveness. [14] Was the
tender process followed in the present case fair? A high-ranking
municipal official purported
to give the 9
th
respondent an opportunity of augmenting its tender so that its offer
might have a better chance of acceptance by the decision-making
body.
The augmented offer was at first concealed from and then represented
to the mayoral committee as having been the tender offer.
It was
accepted on that basis.
The
deception stripped the tender process of an essential element of
fairness: the equal evaluation of tenders
.
Where subterfuge and deceit subvert the essence of a tender process,
participation in it is prejudicial to everyone of the competing
tenderers whether it stood a chance of winning the tender or not."
(Emphasis added.)
[50]
The present case may not involve "subterfuge and deceit"
but it is common cause that the 5
th
respondent was afforded the opportunity to augment its tender after
the closing date and before the evaluation date. This opportunity
was
also granted to the 5
th
respondent to overcome the problem caused by the disqualification of
the applicant. In my view there was no equal evaluation of
tenders in
this case so that the tender process was "stripped of an
essential element of fairness" in the words of the
learned Judge
of Appeal. Given the stipulation in both Special Condition 5 and
Special Condition 7 that non-compliance would lead
to
disqualification, I see no basis whatsoever for justifying the action
of assisting the 5
th
respondent but not the applicant. Moreover, given the ambiguous
nature of the questions posed to the applicant,
supra,
when
the clause 7(a) subject had to be dealt with, this is clearly a case
where it would be "fair to ask a tenderer to explain
an
ambiguity in its tender" and "fair to allow a tenderer to
correct an obvious mistake" and "fair to ask for
clarification or details required for the proper evaluation of the
tender" -see
Metro
Projects
at
21C-E.
[51]
In all the circumstances I have come to the conclusion that there was
a lack of procedural fairness in the process, and that
the applicant
was justified in attacking the decision, by way of this review
application when it did so in the first place.
The
costs
[52]
I now turn to the question of costs.
[53]
In
Sapela,
supra,
it
was also held that there was no undue delay in launching the review
proceedings. Although the appeal was upheld, because of
considerations of pragmatism and practicality and the effluxion of
time, the appellants were nevertheless ordered to pay the costs
of
the respondent, which was the successful applicant in the court
below. The appellants were ordered to pay the costs flowing
from the
proceedings in both courts. The learned Judge of Appeal says the
following at 650H-651A:
"Had
the matter been adjudicated when the review proceedings were launched
it would in all probability still have been practicable
to grant the
respondents relief. Through no fault of their own this is now denied
them. It is true that in the answering affidavit
filed on behalf of
the appellants the point was taken that the matter had become
academic, but the main thrust of their resistance
to the relief
sought both in this court and in the court below was always that the
respondents' complaints had no substance. In
the special
circumstances of the case it seems to me to be appropriate for the
appellants to be ordered to pay the respondents'
costs both in this
court and in the court below."
[54]
The case of
Sebenza
Kahle Trade CC v Emalahleni Local Municipal Council & Another
[2003]
2 All SA 340
(T) also involved a challenge of a tender award. The
contract period provided for in the tender was only eight months. The
plaintiff
sought an urgent interim order restraining the first
defendant from awarding the contract to the second defendant. At the
hearing
of the application the plaintiff accepted that the contract
had already been awarded, and the parties signed a consent order in
terms of which the matter would be referred to trial.
The
court found that the award of the tender was irregular,
inter
alia
because
the plaintiffs right to procedurally fair administrative action had
been breached. However, it was also held that the plaintiff
had
known, or ought reasonably to have known, that the contract period of
eight months would expire (and that therefore the contract
would be
completed) before the matter could be adjudicated. This should have
been clear to the plaintiff from the date that the
application for
urgent relief had failed, or at least from the date of the consent
order referring the matter to trial.
The
court concluded that the plaintiff was entitled to all costs
(excluding specific exceptions) up to the date of the consent order
referring the matter to trial, from which time the danger that the
work would have been completed before the matter was adjudicated
had
become an obvious probability. The first defendant was entitled to
all costs from that date until conclusion of the matter.
[55]
In the present case, I have already found that there was no undue
delay on the part of the applicant in launching the application.
I
have also found that the tender process was flawed for lack of
procedural fairness. There was also no suggestion of improper
conduct
of any nature on the part of the applicant. Moreover, it was not
argued on behalf of any of the respondents, during the
proceedings
before me. that the applicant should have protected its interests by
seeking interim interdictory relief before launching
the substantive
application. It seems to me that, given the fact that the contracts
had already been awarded by the time the applicant
became aware of
the outcome of the tender process, and given the nature of the
contracts awarded namely the supply of antiretroviral
drugs, that it
would have been difficult for the applicant to obtain such interim
relief from the point of view of prejudice and
the balance of
convenience. I debated this issue with Mr Reyneke, who was in
agreement with these sentiments.
Against
this background, I am of the view that the applicant was justified in
taking the decision to launch these proceedings in
the form of a
substantive application in the normal course.
[56]
However, when the 3
rd
and the 4
th
,
as well as the 6
th
and the 7
th
respondents filed their answering affidavits in late July and early
August 2009, they all presented the argument that the application
was
likely to be heard only shortly before the two year period came to an
end. In the event, these predictions turned out to be
correct.
In
addition, all these respondents offered the argument that this was a
case where the court should exercise its discretion against
setting
aside the administrative action, even if it is found to have been
unlawful, because of the practical considerations and
the principles
laid down in the judgments referred to earlier, including
Oudekrans,
Sapela
and
Millennium
Waste.
In
their answering affidavits, the 6
th
and the 7
th
respondents also disclosed details of the relevant practical
considerations such as their investments in the project and the
interests
of the patients receiving the drug treatment.
All
the respondents, in their affidavits, also challenged the applicant's
argument dealing with the validity of the tender process.
[57]
In my view, the applicant should, at this stage, have realised that
the odds were heavily stacked against it and that the application
may
even be rendered moot through effluxion of time.
[58]
I add that the 3
rd
and 4
th
respondents, in their answering affidavit filed on 20 July 2009, also
raised a defence of non-joinder in the sense that the applicant
had
failed to join the participating departments as parties to the
proceedings. This resulted in a further delay in the progress
of the
matter, through the oversight of the applicant, who only managed to
join the participating departments by an order of this
court dated 5
November 2009.
[59]
The 3
rd
and the 4
th
respondents filed their answering affidavit on 20 July 2009 and the
7
th
respondent filed on 23 July 2009. It is not clear when the 6
th
respondent filed its affidavit, but it would have been shortly after
4 August 2009. However, it seems to me that by 23 July 2009,
the
applicant had enough information and sufficient warning about the
likely outcome of the application, to reconsider its position.
Taking
one's cue from
Sebenza
Kahle Trade CC, supra,
it
seems that an equitable approach would be for the 3
rd
and 4
th
respondents to pay the costs up to 23 July 2009 and for the applicant
to pay the costs incurred thereafter.
The
order
[60]
I make the following order:
1.
The application is dismissed.
2.
The 3
rd
and the 4
th
respondents, jointly and severally, are ordered to pay the costs of
the applicant and the costs of the 6
th
and the 7
lh
respondents incurred up to and including 23 July 2009. In the case of
the 3
rd
and the 4
th
respondents, and the 6
lh
respondent, the costs will include the costs flowing from the
employment of two counsel.
3.
The applicant is ordered to pay the costs of the 3
rd
and the 4
th
respondents and the
6
1
'
1
and the 7
th
respondents incurred after 23 July 2009. In the case of the 3
r
and the 4
th
respondents and the 6
th
respondent, the costs will include the costs flowing from the
employment of two counsel.
WRC
PRINSLOO
JUDGE
OF THE NORTH GAUTENG HIGH COURT
59309-2008
HEARD
ON: 28 APRIL 2010
COUNSEL
FOR THE APPLICANT: J J REYNEKE SC
INSTRUCTED
BY: CLIFFE DECKER HOFMEYR INC
COUNSEL
FOR THE 3
RD
AND 4
th
RESPONDENTS: B R TOKOTA SC
ASSISTED
BY M C BALOYI COUNSEL FOR THE 6
th
RESPONDENT: STEVEN BUDLENDER
ASSISTED
BY NOMZAMO MJI INSTRUCTED BY: READ HOPE PHILLIPS THOMAS & CADMAN
INC COUNSEL FOR THE 7
1,1
RESPONDENT: B E LEECH INSTRUCTED BY: WERKSMANS INC