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[2012] ZAECPEHC 16
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Macrovest 102 (Pty) Ltd t/a Business Intelligence and Mazizi v Municipal Manager of the Nelson Mandela Metropolitan Municipality and Others (467/2012) [2012] ZAECPEHC 16 (8 March 2012)
IN THE
HIGH COURT OF SOUTH AFRICA NOT REPORTABLE
EASTERN
CAPE, PORT ELIZABETH
Case No.: 467/2012
Date Heard: 29 February 2012
Date Delivered: 8 March 2012
In the
matter between:
MACROVEST 102 (PTY) LTD t/a BUSINESS
INTELLIGENCE AND MAZIZI
….......................................................................
Applicant
and
THE MUNICIPAL MANAGER OF THE NELSON
MANDELA BAY METROPOLITIAN
MUNICIPALITY
….................................................................................
First
Respondent
THE BID ADJUDICATION COMMITTEE
OF THE NELSON MANDELA BAY
METROPOLITIAN MUNICIPALITY
….............................................
Second
Respondent
THE NELSON MANDELA BAY
METROPOLITIAN MUNICIPALITY
….................................................
Third
Respondent
BUSINESS CONNEXION (PTY) LTD
….............................................
Fourth
Respondent
EPWEB ICT SOLUTIONS
….................................................................
Fifth
Respondent
JUDGMENT
___________________________________________________________________
EKSTEEN
J:
[1] The applicant seeks an interim
interdict restraining the first, second and third respondents from
awarding a tender to the fourth
or fifth respondents for the support,
development and maintenance of an online web based financial
management tool, pending the
finalisation of review proceedings which
have been instituted. In addition the applicant seeks access to
certain documentation
relating to the evaluation of the bids
submitted together with any reports, recommendations and written
decisions which may have
been taken.
The background
[2] During 2005 the third respondent
invited suitable applicants to apply to assist it with stakeholder
engagement facilitation,
business process management and project
management in order to aid and improve the existing financial
management and controls of
the third respondent. The applicant
submitted an application which was successful and on 1 June 2006 the
applicant concluded a
service level agreement with the third
respondent in this regard. In the course of the execution of this
contract the third respondent
requested the applicant to design a
financial management tool (FMT). The applicant accordingly designed
and prototyped the FMT
between August 2005 and July 2007. The FMT was
initially called the “Management Information Assistant”
although the
name was subsequently changed.
[3] During 2007 the third respondent
called for tenders for the “development, support and
maintenance of Nelson Mandela Bay
Municipality ‘financial
management tool’ for a three year period”. In December of
that year the contract was
awarded to the applicant. Although the
award of this contract was only finalised in December 2007 the
contract period lapsed on
31 June 2010. Upon the lapsing of this
contract the first respondent, alternatively the second respondent,
approved repeated deviations
from time to time to extend the services
of the applicant, until 31 December 2011 when the final deviation
lapsed.
[4] During 2010 the third respondent
again called for tenders for the “support, development and
maintenance of an online web
based financial management tool”.
This process culminated with the cancellation of the tender process
and a decision not
to accept any of the tenders submitted. The tender
was re-advertised in April 2011. This tender process too was later
cancelled
as it was allegedly flawed. Finally, in September 2011 the
tender was advertised yet again and it is this tender process which
forms the subject of the present litigation.
[5] It is common cause that the
applicant and the fourth and fifth respondents submitted bids in
response to the September 2011
tender invitation. Of significance for
purposes of the present application is that the invitation to tender
which was advertised
records the evaluation criteria and the
weighting to be applied in order to assess the scores of the various
tenders. The evaluation
criteria is, however, conditional on each
tenderer’s “functionality pre-evaluation” and only
tenderers scoring
a total of 60% (60 points) or higher on this test
are evaluated further. It follows, subject to what is set out below,
that unless
a bidder meets the minimum functionality criteria its bid
will not be further considered, will not be evaluated and will not be
scored.
[6] The applicant in its founding
papers has dealt extensively with the criteria for functionality and
contends, convincingly, that
it clearly meets the functionality
requirements of the tender. This much is not seriously disputed.
The applicant’s contention
[7] Mr van Schoor, who deposed to
the founding affidavit on behalf of the applicant, says:
“
13.
I have been reliably informed that the Applicant’s tender was
deemed unsuccessful as a result of the Applicant’s
failure to
score the minimum 60% “Functionality Requirement” score
recorded in tender invitation. I am not able to
disclose the source
of this information as this may jeopardize the future employment of
the person conveying the information and
such person sought the
assurance that their identity would not be disclosed. I emphasize
however that I have every reason to believe
that the information
conveyed is accurate.”
I set out this averment in full as
the admissibility of these averments was the subject of much
controversy at the bar. I shall
revert to this aspect below.
[8] The previous deviations which
extended the applicant’s earlier contract from time to time
expired on 31 December 2011.
The applicant contends that it has
therefore made repeated enquiries as to the progress of the
evaluation and the adjudication
of the September 2011 FMT tender,
particularly from the office of the supply chain of the third
respondent. It alleges that it
was unable to obtain any meaningful
information during January 2012 as to the progress with the
evaluation and adjudication of
the tender. Early in February 2012 Van
Schoor says that he was able to make contact with one Minnaar, an
official in the third
respondent’s Supply Chain Management
Unit. Upon this enquiry as to the status of the tender Minnaar
advised that the applicant
would receive a letter informing it of the
outcome of the tender on Friday, 3 February 2012. He received no such
communication.
In the circumstances he again contacted Minnaar who
advised him that the matter was presently before the first
respondent.
[9] On 6 February 2012 the
applicant, through its attorney of record, addressed a letter to the
first respondent, which was hand
delivered to the first respondent on
the same day, in which it sought certain information and
undertakings. In the letter Attorney
van Wyk, on behalf of the
applicant, records:
“
It
has come to our client’s attention that it has been contended
that our client’s tender was regarded as ‘unresponsive’
as allegedly not being compliant with the functionality requirement
of the relevant tender. This is of course absurd given the
fact that
our client has designed the Municipality’s FMT and has vast
experience in the operation of the system since August
2005 …”
[10] The letter proceeds later to
record as follows:
“
7.
In the circumstances we are instructed to require the following:
a.
Copies of the recommendations of the Bid Evaluation and Adjudication
Committees in respect of the relevant tender.
b.
Whether the Municipal Manager has made any decision in respect of
such tender.
c.
Full reasons as to the basis upon which our client’s tender was
allegedly found to be non-responsive.
d.
An undertaking that no final award will be made in respect of the
2011 FMT Tender pending the final outcome of a review application
which our client will institute in the High Court to interdict the
award and/or implementation of the tender should the Municipality
insist that such award and implementation is to proceed to be awarded
to any Third Party.
8.
We require you urgent response by no later than 2pm on Wednesday 8
February 2011, failing which we have instructions to launch
an urgent
application to obtain the necessary interdictory relief to protect
our client’s rights as set out above.”
[11] No response was forthcoming
from the first respondent and at the time of argument of the matter
on 29 February 2012 there had
still been no response from the first
respondent. In the circumstances these proceedings were issued. The
applicant contends that
the decision of the Bid Evaluation Committee
to exclude the applicant from the tender process on the basis of its
alleged failure
to meet the “functionality requirement”
is irrational and that the decision of the second respondent, or the
decision
which it proposes to make, is tainted thereby. It alleges
further that the first respondent “is to shortly award the
tender
to either the fourth or the fifth respondent”. Van
Schoor proceeds in addition to state as follows:
‘
The
delays in the finalisation of the tender process have never been
explained by the Municipality or its officials. I respectfully
submit
however that a more than reasonable period of time has elapsed for
the relevant internal processes of the Municipality to
be finalised
if there was to be a proper evaluation and adjudication upon the said
SEPTEMBER 2011 FMT TENDER. It is untenable for
tenderers, including
the Applicant, to be left “
in
limbo
”.
Tenderers are, with respect, entitled to reasonably expeditious
processing of tenders and are entitled to be informed,
within a
reasonable time, of the outcome of the processes. This has not
occurred in the present case.’
[12] Initially the first, second and
third respondents entered an appearance to defend, however, no papers
were filed. On the morning
of the hearing the opposition to the
application was withdrawn and the first, second and third respondents
filed a notice indicating
that they would abide the decision of the
court. The fourth respondent never entered an appearance to defend
and the fifth respondent
has vehemently opposed the grant of any
relief.
Fifth respondent’s
opposition
[13] At the outset the fifth
respondent filed an application to strike out the entire paragraph 13
of the applicant’s founding
affidavit being the averments
relating to the “reliable” information received by the
applicant from an undisclosed
source that the applicant had failed to
score the minimum 60% “functionality requirement”, which
I have quoted above.
The application to strike out is based on the
allegations being hearsay and the fifth respondent contends that
these allegations
are the corner stone of the entire application. The
fifth respondent points out that the source of the information is not
disclosed
nor is it stated when or how the applicant was informed
that its tender was “deemed unsuccessful”. In addition
the
fifth respondent points out that the founding affidavit does not
state whether the alleged source has personal knowledge of the
information conveyed and it is contended that no basis is laid by the
applicant for his belief that the information is accurate.
[14] Turning to the merits the fifth
respondent has raised a number of defences on the papers. Firstly it
is contended that the
application is premature and therefore not ripe
for hearing as no administrative action has yet been taken. This is
the thrust
of the fifth respondent’s case. Secondly the fifth
respondent contends that the form of the relief claimed is
inappropriate
and that it is not competent. Thirdly it is contended
that the applicant ought to have exhausted his internal remedies in
terms
of the Supply Chain Management Policy prior to the institution
of these proceedings. In the fourth instance an attack is made on
the
bona fides
of the founding affidavit and it is alleged that
Van Schoor has failed to make an adequate disclosure. Finally it was
contended
on the papers that the applicant’s failure to comply
with the rules of procedure for judicial review of administrative
action
under the Promotion of Administrative Justice Act 3 of 2000
(PAJA) is fatal.
[15] At the hearing of the matter
the last defence, that relating to the rules of procedure under PAJA
was abandoned. Not all of
the remaining defences were pursued with
equal enthusiasm at the hearing of the matter and the attack upon the
bona fides
of Van Schoor for his alleged inadequate disclosure
was not pursued at all. I shall accordingly not consider this latter
issue
herein.
[16] Much of the argument underlying
these defences is based upon the founding affidavits of the
applicant. The fifth respondent,
understandably, is not in a position
to dispute a great deal of the factual averments set out in the
founding papers. The answering
papers do, however, deal fully with
the fifth respondent’s tender and its communications with the
third respondent. The deponent
on behalf of the fifth respondent,
Njoko, says:
“
17.
The Fifth Respondent submitted a complete tender in response to the
September 2011 tender to the NMBM on or about the 22
nd
September 2011. Thereafter the Fifth Respondent was requested to make
a presentation to the Bid Evaluation Committee of the NMBM
on the 1
st
November 2011, which the Fifth Respondent duly did.
18.
On or about Tuesday the 17
th
January 2012, Mr Minnaar of
the NMBM contacted me and enquired if the prices quoted by the Fifth
Respondent would remain valid
for the ensuing 3 months. I informed Mr
Minnaar that it would remain valid. Mr Minnaar then asked me to
confirm this in writing,
which I duly did in an e-mail. Thereafter Mr
Minnaar contacted me again on 7
th
February 2012 and
requested me to sign the e-mail, which I duly did.”
[17] In reply to this averment the
applicant refers to the tender specification which required pricing
to be valid for 90 days only
from the date of the closure of tenders.
This, of course, is indicative of the anticipated date of the award
of the tender.
[18] The applicant then proceeds to
record that it was not contacted by an official of the third
respondent to confirm whether its
prices as quoted in the tender
response would remain valid for the ensuing three months from January
2012. In the circumstances
the validity of the applicant’s bid
prices lapsed.
The hearsay evidence
[19] The fifth respondent, as
recorded above, seeks at the outset to strike out the averments made
by the applicant in respect of
the communication it received to the
effect that its bid had been disqualified as non-responsive due to it
not meeting the functionality
requirement. It is common cause that it
is hearsay.
[20] The fifth respondent contends
that this hearsay evidence constitutes the corner stone of the
applicant’s case and without
it no case is made out. Mr
Swanepoel
, on behalf of the fifth respondent, argues
that where an affidavit sets out facts based on hearsay information
the deponent must
state that the allegations of fact are true, to the
best of his or her information, knowledge and belief and must state
the basis
or the grounds for his or her knowledge or belief. He
argues that a failure to state the source of the information or the
grounds
of the belief in the original affidavit, constitutes an
irregularity that cannot be cured by stating them in the replying
affidavit.
Mr
Swanepoel
has referred me to a series of
decided cases in support of these contentions all of which were
decided prior to October 1988. The
relevance of the date is to be
found in the fact that the Law of Evidence Amendment Act, 45 of 1988
(the Evidence Act) which was
assented to on 15 April 1988 came into
operation on 3 October 1988.
[21] At common law the rule that
hearsay evidence was inadmissible was strictly applied unless the
evidence fell within one of the
exceptions recognised at common law
or provided for in statute. This notwithstanding our courts
recognised that hearsay evidence
by way of affidavit could be
admitted in urgent interlocutory matters, provided the deponent
reveals the source of the information
concerned, avers that he or she
believes such information to be true and correct and furnishes the
grounds for such belief in a
statement of information or belief.
[22] After October 1988, however,
the common law rule in respect of hearsay no longer applies in South
Africa and the issue falls
to be determined in accordance with
section 3 of the Evidence Act. The relevant portion, for present
purposes, of section 3 of
the Evidence Act provides as follows:
“
3(1)
Subject to the provisions of any other law, hearsay evidence shall
not be admitted as evidence at criminal or civil proceedings,
unless-
(a)
…
(b)
…
(c)
the
court, having regard to-
(i)
the nature of the proceedings;
(ii)
the nature of the evidence;
(iii)
the purpose for which the evidence is tendered;
(iv)
the probative value of the evidence;
(v)
the reason why the evidence is not given by the person upon
whose credibility the probative value of such
evidence depends;
(vi)
any prejudice to a party which the admission of such evidence might
entail; and
(vii) any
other factor which should in the opinion of the court be taken into
account,
is
of the opinion that such evidence should be admitted in the interests
of justice.
(2)
The provisions of subsection (1) shall not render admissible any
evidence which is inadmissible on any ground other than that
such
evidence is hearsay evidence.”
[23] I think that section 3 of the
Evidence Act is now the sole standard whereby the admissibility or
otherwise of hearsay evidence
should be adjudged. It does not require
any formality. I recognise that the disclosure of the source and the
reasons for the belief
in the correctness of the information are
factors which may contribute to an assessment of the probative value
of the evidence.
I do not consider, however, that they are essential
components. I am alive to the fact that in
Fey NO v Van der
Westhuizen and Others
2003 (2) All SA 679
(C) at 684, a
decision to which I was not referred, Meer J recorded the
requirements laid by our courts prior to 1988 and proceeded
to apply
that test to the matter before her. She concluded that the hearsay
evidence in that matter should be allowed. To the extent,
that it may
be contended that Meer J intended that hearsay evidence could not be
permitted in urgent applications unless these
averments were made I
am in respectful disagreement. It follows that I am also in
respectful disagreement with the comments contained
in
Erasmus
:
Superior Court Practice
B1-39-B1-40 which are to the same
effect. In these circumstances I do not consider that the failure to
have stated in full the
facts upon which the deponent bases his
grounds for belief and how he obtained the information is necessarily
fatal. The court
is still required to assess the question of
admissibility with reference to the factors as set out in section 3
of the Evidence
Act. If, on a consideration of all those factors, the
court is of the opinion that such evidence should be admitted in the
interest
of justice, then it should be allowed.
[24] The nature of the proceedings
are of course a consideration to be weighed. In criminal proceedings
the courts would be less
amenable to admitting hearsay evidence than
in civil proceedings. The present matter relates to application
proceedings in which
interim relief only is sought. The relief is
aimed primarily at preserving the
status quo
pending the
finalisation of the review proceedings and the prejudice which may
follow is accordingly not as great as it would be
were final relief
granted. I think that this is a factor which militates in favour of
the admission of the hearsay evidence.
[25] The nature of the evidence, the
purpose for which it is tendered and the probative value of the
evidence are all weighty factors
to be considered. In
Hlongwane
and Others v Rector,
St Francis College,
and
Others
1989 (3) SA 318
(D) at 324E-F Galgut J considered that
the fact that hearsay evidence was tendered to establish a
fundamental issue as opposed
to a subordinate or side issue to be a
fact that weighed against the reception of hearsay evidence. This
approach has found favour
in some subsequent decisions, however,
Alexander J took the view that evidence that was otherwise relevant
should not depend for
its reception on its importance in the case and
that it should be admitted if it carried “the hallmark of
truthfulness and
reliability”. (See
S v Mpofu
1993 (2) SACR 109
(N) at 116h-j.)
[26] What do the facts in the
present case show? The initial averment by Van Schoor that he had
been “reliably informed”
that the applicant’s
tender was deemed unsuccessful as a result of the applicant’s
failure to score the minimum 60%
“functionality requirement”
is deliberately vague. He does not, as recorded above, set out the
source of his information
nor does he provide any further information
from which the reliability of the source may be assessed. It is not
evident whether
his source had firsthand knowledge of this
information or whether the source too relies on hearsay. This Mr
Buchanan
, on behalf of the applicant, argues that it is
done to give as much protection as possible to the identity of the
source.
[27] The single paragraph should,
however, not be viewed in isolation. I think that there are however a
number of other factors
which emerge from the evidence which show
clearly that this hearsay allegation has “the hallmark of
truthfulness and reliability”.
Firstly, the various deviations
in respect of the maintenance of the system which has been granted
from time to time lapsed on
31 December 2011 and were not extended
thus signalling the end of the applicant’s engagement.
Secondly, early in February
when Van Schoor enquired from Mr Minnaar
in respect of the status of the tender he was advised that he would
receive a letter on
the 3 February 2012 which would inform him of the
outcome of the tender. It is apparent from this communication that
Minnaar held
the view that by 3 February 2012 a final decision would
have been made in respect of the tender.
[28] Thirdly, when no letter was
received on 3 February 2012 Van Schoor again made contact with
Minnaar who advised that the matter
was presently before the first
respondent, the accounting officer of the third respondent. It
emerges too from the answering papers
of the fifth respondent that in
this time, between 17 January 2012 and 7 February 2012 the third
respondent was actively endeavouring
to secure an undertaking from
the fifth respondent that its pricing structure set out in its bid
would remain firm for a further
three months. We don’t know
whether a similar approach was made to the fourth respondent but we
do know from the papers that
the applicant did not receive such an
approach. This clearly suggests that the applicant had been excluded
from further consideration
in respect of the tender. Indeed, as
recorded above, the validity of its bid prices were allowed to lapse
whereas those of other
bidders, or at least the fifth respondent,
were extended.
[29] On 6 February the applicant’s
attorney of record addressed a letter which was hand delivered to the
first respondent,
the accounting officer of the third respondent. In
this letter, as recorded above, it was contended that the applicant
had been
excluded from the tender process by virtue of its bid having
been regarded as “unresponsive”. This the applicant
contended
was absurd and irrational and the applicant demanded
reasons as to the basis upon which it had allegedly been held to be
unresponsive.
In this letter Attorney van Wyk also enquired from the
first respondent whether a decision had in fact been made in respect
of
the tender. The letter concluded by threatening litigation unless
a clear response was received. In the face hereof the applicant
was
met with a deathly silence. In
McWilliams v First Consolidated
Holdings (Pty) Ltd
1982 (2) SA 1
(A) at 10E-F Miller JA dealt
as follows with a failure to respond to a letter:
‘
I
accept that “quiescence is not necessarily acquiescence”
(see
Collen
v Rietfontein Engineering Works
1948
(1) SA 413
(A) at 422) and that a party’s failure to reply to a
letter asserting the existence of an obligation owed by such party to
the writer does not always justify an inference that the assertion
was accepted as the truth. But in general, when according to
ordinary
commercial practice and human expectation firm repudiation of such an
assertion would be the norm if it was not accepted
as correct, such
party’s silence and inaction, unless satisfactorily explained,
may be taken to constitute an admission by
him of the truth of the
assertion, or at least will be an important factor telling against
him in the assessment of the probabilities
and in the final
determination of the dispute.’
[30] I think that in the ordinary
commercial practice and human expectation a firm repudiation of the
applicant’s contention
as set out in the letter of 6 February
would have been the norm had the first respondent not accepted as
correct the contention
that the applicant’s bid was considered
non-responsive. When all of these factors set out above are viewed
together I think
that there are strong indications in the papers
that, notwithstanding that hearsay evidence is tendered to establish
a fundamental
issue, it has sufficient probative value to justify its
admission.
[31] The reason why the evidence is
not to be given by the original source is, I think, satisfactorily
explained and, by virtue
of the indicators of truthfulness set out
above, I have some difficulty in postulating any prejudice which the
fifth respondent
might endure if such evidence is admitted. The
hearsay evidence is evidence against the first, second and third
respondent and
the process internal to the third respondent. The
third respondent has no objection to the evidence. An enquiry to the
first and
third respondent may readily have provided confirmation of
the veracity of the averment had the fifth respondent sought to
verify
this. In all the circumstances I consider that the evidence
should be received in the interests of justice. It follows that the
application to strike out these averments in the founding papers must
fail.
[32] I pause to mention that on the
morning of the hearing a lengthy application to strike out some 32
portions of evidence in the
replying affidavits was delivered.
Thankfully, Mr
Swanepoel
, correctly in my view, did not
pursue argument in respect of each of these passages individually.
His submission is that this application
is founded on the fact that
the replying affidavit proceeds on a basis inconsistent with the
founding affidavit. In the founding
affidavit, so it is contended,
the applicant based its case on a “decision” having been
taken. In reply, so it is argued,
it is now contended that there has
been a “failure to take a decision”.
[33] I think that this contention is
spurious. The foundation of the application in the founding papers
and in reply is that a decision
was taken which eliminated the
applicant from the process because it did not meet the functionality
requirement. The applicant
in its founding affidavit has in any event
made it abundantly clear that it contends that tenderers are entitled
to reasonable
expeditious processing of tenders and are entitled to
be informed, within a reasonable time, of the outcome of such
processes.
This it is contended did not occur. I have recorded the
exact assertion set out in the founding papers at paragraph 11 above.
[34] It is of course true that an
applicant must make in his founding papers the case which the
respondent is called upon to meet.
Thus in
Naude & Another
v Fraser
[1998] ZASCA 56
;
1998 (3) All SA 239
(A) at 260e-g Schutz JA stated:
“
There
is little point in granting a person a hearing if he does not know
how he is concerned, what case he has to meet. One of the
numerous
manifestations of the fundamental principle is the sub-rule that he
who relies on a particular section of statute must
either state the
number of the section and the statute, or formulate his case
sufficiently clearly so as to indicate what he is
relying on.”
[35] I think that the paragraph
which I have quoted in full from the founding papers earlier dealing
with the delays in finalisation
of the tender make it abundantly
clear that the applicant’s contention was that by February 2012
it had been entitled to
a decision. I do not consider, accordingly
that there has been a change in stance between the founding papers
and the replying
papers.
[36] In addition in the second
application to strike out there are numerous attempts to strike out
references to dates. In the founding
papers the applicant alleged
that he spoke to Minnaar early in February when Minnaar indicated
that he would receive a letter setting
out the outcome of the tender
on 3 February. It is apparent from the context of the statement that
that communication occurred
either on the 1
st
of February
or the 2
nd
of February as the response was to be received
on 3 February. It does not appear to be of any significance at all
whether it was
the 1
st
or the 2
nd
. In the
replying papers the applicant states that Minnaar so advised him on 1
February. This the first respondent finds offensive
and contends that
it ought to have been included in the founding papers. I do not
agree.
[37] In the founding papers the
deponent contends that when he did not receive a reply on 3 February
he again made contact with
Minnaar who advised him that the matter
was presently before the first respondent. Again in the founding
papers Van Schoor did
not allude to the date upon which this contact
was made with Minnaar. On 6 February, however, the applicant
addressed a letter,
via his attorneys, to the first respondent
demanding to know, inter alia, whether the first respondent had made
a decision in respect
of the tender. It is accordingly, in my view,
abundantly clear from the founding papers that the second
communication with Minnaar
occurred on the 3
rd
, 4
th
or 5
th
of February. Again there does not appear to me to
be any significance whatsoever in the exact date. In the replying
papers Van
Schoor states that this communication occurred on the 3
rd
of February 2012. This he referred to on a number of occasions and on
each occasion the fifth respondent seeks to strike out this
averment
as “it amounts to new matter which should have been included in
the founding affidavit”. I disagree. The founding
affidavit is
abundantly clear in all material respects.
[38] I do not intend to deal with
each passage of evidence to which objection is taken in the replying
affidavit. This is particularly
so as no argument was presented to me
in respect of each individual matter. Suffice it to say that in my
view the application to
strike out should be dismissed.
The interim interdict
[39] In order for the applicant to
succeed in obtaining the interim relief which it seeks in Part A of
the Notice of Motion it is
required to establish:
1. That the right which is the
subject matter of the main action (in this case the review) and which
the applicant seeks to protect
by means of interim relief is clear
or, if not clear,
prima facie
established, though open to some
doubt;
2. if the right is only
prima
facie
established, that there is a well-grounded apprehension of
irreparable harm to the applicant if the interim relief is not
granted
and the applicant ultimately succeeds in establishing its
right;
3. that the balance of convenience
favours the applicant in the granting of interim relief and
4. that the applicant has no other
satisfactory remedy.
The applicant’s
prima
facie
right and its apprehension of harm.
[40] Mr
Swanepoel
, on
behalf of the fifth respondent argues that the applicant has not
shown a
prima facie
right and that it effectively wants to
intervene in an uncompleted, unfinished tender process, which, he
argues, is impermissible
as the decision making process has not yet
been completed.
[41] This argument is founded
largely on the third respondent’s Supply Chain Management
Policy (the Policy) which sets out
a layered process of decision
making through various committees. A Bid Specification Committee
prepares the specification for each
procurement which the
municipality envisages. Once tenders have been called for and
received each bid is referred first to the
Bid Evaluation Committee.
The obligations of the Bid Evaluation Committee are set out in clause
28 of the Policy. The Bid Evaluation
Committee is called upon to
evaluate each bid in accordance with the specifications for a
specific procurement and the points system
set out in terms of clause
27 of the Policy. In doing so it is required in terms of clause
28(1)(b) to evaluate each bidders ability
to execute the contract.
This is the functionality requirement. In terms of the specific bid
specification in the present matter
the tender is subject to
functionality pre-evaluation and only tenderers who reach the
functionality requirement will be evaluated
further. It follows that
in adjudicating bids in accordance with the Policy the Bid Evaluation
Committee is required by the specifications
to eliminate any bidder
who has not complied with the requirement of functionality. The Bid
Evaluation Committee must then proceed
in terms of clause 28(c) and
check, in respect of the recommended bidder, whether municipal rates
and taxes and municipal service
charges are not in arrears, and then
to submit to the Adjudication Committee a report and recommendations
regarding the award of
the bid or any other related matters. Its
report and recommendations relate to the award of the bid and related
matters.
[42] The obligations of the Bid
Adjudication Committee are set out in clause 29 of the Policy. They
are required to consider the
report and recommendations of the Bid
Evaluation Committee and depending on its delegation, either make a
final award or a recommendation
to the accounting officer to make a
final award.
[43] It is common cause that the Bid
Adjudication Committee may not award a contract in excess of R10
million and such contracts
would have to be referred, together with
their recommendation, to the accounting officer. The fifth respondent
in this matter contends
that the present contract is one which only
the accounting officer can award. That has not been disputed by the
applicant. The
present contract can therefore only be awarded by the
first respondent. Over and above the aforegoing the Bid Adjudication
Committee
may also make other recommendations to the accounting
officer as to how to proceed with the relevant procurement. Clause
29(6)
of the Policy provides that the accounting officer may at any
stage of the bidding process refer any recommendation made by the
Evaluation Committee or the Adjudication Committee back to that
committee for reconsideration of the recommendation. On this basis
it
is argued that the recommendations of the Bid Evaluation Committee
and the Bid Adjudication Committee do not constitute administrative
action susceptible of review. In these circumstances Mr
Swanepoel
contends that the dispute, such as it is, is not ripe for challenge.
[44] I have set out the factual
course of events above. What emerges from that is, I think, that
after receiving a report from the
unnamed source in respect of the
disqualification of the applicant’s bid the applicant made
repeated enquiries to Mr Minnaar.
Minnaar indicated on 1 February
that the outcome of the tender would be communicated to Van Schoor on
3 February. Clearly what
Minnaar was communicating is that by the 3
rd
of February the process would be finalised. When that letter was not
received and further enquiries were to Minnaar he indicated
that the
matter was before the accounting officer. That prompted the letter to
which I have referred above. The irregularity contended
for by the
applicant in the form of its exclusion was pertinently raised and the
first respondent was requested to indicate whether
he had taken a
decision. This was not responded to. This, as indicated earlier,
constitutes, in my view, a firm indication that
the first respondent
himself accepted the correctness of the assertion. Added to this
there are the events which I have referred
to in paragraph [28] above
which were unfolding in the same period when the letter was written.
I think that it can be said with
a measure of confidence that the
applicant has manifestly been eliminated from the tender process
whilst others, at least the fifth
respondent, remain in contention.
Even if I accept that the first respondent may yet refer the matter
back to the Bid Evaluation
Committee or to the Bid Adjudication
Committee the prices set out in the applicant’s bid will now
have lapsed for it unlike
other bidders, was not requested to extend
their application. The applicant, it would appear, is clearly out.
[45] In
Chairman,
State Tender Board v Digital Voice Processing (Pty) Ltd;
Chairman, State Tender Board v Sneller Digital (Pty) Ltd
(unreported decision of the SCA in case number 764/2010
[2011] ZASCA
202
(24 November 2011) Plasket AJA held at para [18] as follows:
“
[18]
To the extent that some of the case law tends to suggest that, as a
general principle, notification is the touchstone for ripeness,
I am
of the view that this is too rigidly expressed. This view has its
genesis in cases like
Estate
Garlick v Commissioner for Inland Revenue
,
which held that the judgment of a
court
only has efficacy once it is handed down, and stems from an era when
principles relating to juridical decision-making tended to
be applied
to administrative decision-making, often without due regard to the
differences in the nature, purpose and rationale
of these two types
of public power.”
Estate Garlick v Commissioner
for Inland Revenue
was reported in
1934 AD 499
at 502.
[46] Plasket AJA went on at para
[20] to hold as follows:
“
[20]
Generally speaking, whether an administrative action is ripe for
challenge depends on its impact and not on whether the decision-maker
has formalistically notified the affected party of the decision or
even on whether the decision is a preliminary one or the ultimate
decision in a layered process …. Ultimately, whether a
decision is ripe for challenge is a question of fact, not one of
dogma.”
[47] On a consideration of the facts
of this matter I am satisfied that, notwithstanding the fact that the
decision has not been
formally communicated, prima facie, a final
decision has been taken and its impact is already felt.
[48]
Baxter:
Administrative
Law
(1984) at p. 719-720 states:
“
Whether
an issue is ripe for adjudication is a question of degree; it is not
always clear when an administrative decision is to
be regarded as
complete. The courts do not require the complainant to wait until all
possibility of the action being reversed has
disappeared; nor is he
required to await a final outcome when the result is a foregone
conclusion.”
[49]
De Ville
, in
Judicial
Review of Administrative Action in South Africa
, 1
st
ed, 2006 at p. 452 adds the further consideration that where a final
decision should already have been taken but has not occurred,
our
courts are even less inclined to uphold a contention that a matter is
not ripe for hearing. This clearly is such a matter.
[50] In the circumstances I think
that the applicant has made out a
prima facie
right, albeit
open to some doubt and it appears abundantly clear that he has a
reasonable apprehension that the tender process
will be completed
without its bid being considered.
Balance of convenience
[51] In considering the balance of
convenience the court is required to weigh up the likely prejudice
which the applicant would
suffer if the temporary interdict were
refused and the refusal is later shown to be wrong, against the
likely prejudice to the
respondent if the temporary interdict is
granted and the grant of the interdict is later shown to have been
wrong.
[52] In this regard the applicant
alleged that it was established for the sole purpose of providing the
FMT service to the third
respondent. Since August 2005 the third
respondent has been the applicant’s sole client and the FMT has
been its sole project.
The applicant has no other projects or clients
to utilise its employees. The livelihoods of the applicant’s
employees remain
at risk in the interim period. The applicant’s
employees are reliant on their incomes generated from their work
performed
in respect of the third respondent’s FMT. If the
applicant’s employees are lost in the interim period due to the
incorrect
decision of the second respondent and the applicant is
subsequently successful in its review, the applicant would be obliged
to
appoint new highly skilled and experienced employees. This the
applicant contends is untenable as it will effectively lose its
entire business knowledge, specially related to the third
respondent’s FMT.
[53] As against this the fifth
respondent has not alleged any material prejudice which it would
suffer save that Mr
Swanepoel
argues that it would not
be fair to the fifth respondent if it were required to wait for the
review proceedings to be completed
prior to the award of the
contract.
[54] Suffice it to say that I am of
the view that the balance of probabilities clearly favours the
granting of the interim relief.
No alternative remedy
[55] Mr
Swanepoel
argues that this element has not been satisfied at all. The basis for
this argument lies in the argument relating to the ripeness
for
hearing. I have already found that in my view this argument is
flawed.
Relief sought
[56] The interdict which the
applicant seeks is that the first, second and third respondents be
interdicted from awarding the September
2011 Financial Management
Tool Tender (tender number SCM337/2011-2012)(the “tender”)
to the fourth or fifth respondents
and interdicting the first, second
and third respondents from concluding any agreements with the fourth
or fifth respondents to
perform any work in terms of the tender until
the final determination of the review application.
[57] The respondent contends that
the applicant is effectively attempting to secure for itself any
interim and urgent work (pending
the award of the tender) that may be
required in relation to the FMT for itself. This, it is argued, the
applicant is not entitled
to and the court cannot grant it.
[58] The fifth respondent argues
that the Policy allows the first respondent to dispense with the
official procurement processes
in certain circumstances and that he
is entitled to conclude ad hoc contracts with service providers to
attend to any necessary
or emergency work pending the award of the
September 2011 tender.
[59] This is of course true,
however, it seems to me that the argument is founded upon a
misreading of the relief sought. What the
applicant seeks is not to
prevent the conclusion of ad hoc contracts pending the award of the
tender but to preclude the implementation
of the award of the tender
once it has been made. It seeks only to interdict the first, second
and third respondents from awarding
the tender or from concluding
agreements with the fourth or fifth respondents to perform any work
in terms of the tender
. Indeed notice of this relief was
served on the first respondent by the letter on 6 February 2012
wherein the applicant advised
that unless it received an undertaking
that no final award would be made it would approach the High Court to
interdict “the
award and/or implementation of the tender”.
This, I think, is what is sought because it was not known whether the
tender
would be awarded prior to the service of the papers. This, in
turn, arose because the third respondent declined to respond to the
letter of 6 February.
[60] In all the circumstances I do
not think that there is any merit in this argument raised on behalf
of the fifth respondent in
respect of the form of the relief.
Failure to exhaust internal
remedy
[61] Whilst this issue was raised in
the fifth respondent’s papers it was not pursued with any
vigour in argument.
[62] Clause 50 of the Policy deals
with the resolution of disputes, objections, complaints and queries
and provides for the appointment
of an independent and impartial
person to assist in the resolution of disputes between the third
respondent and other persons regarding
decisions or actions taken in
the implementation of the Policy or any matter arising from a
contract awarded in terms of the Policy.
Mr
Swanepoel
argues that the applicant should first have pursued this route before
launching this application.
[63] There are a number of responses
to this argument. Firstly Mr
Buchanan
referred to
clause 50(6) of the Policy which provides expressly that clause 50
should not be read as affecting any person’s
right to approach
a court at any time. On an interpretation of the policy itself it
does not seem to me that this “internal
remedy” was
intended to be a necessary pre-cursor to litigation.
[64] Of significance in this case is
events from 1 February 2012 to 7 February 2012 as set out above. The
applicant had every reason
to believe in these circumstances, that
the first respondent was about to award the contract when the
application was launched.
When the contract is awarded rights and
obligations are immediately created, which is precisely what the
applicant seeks to prevent.
In the circumstances I do not think that
the remedy in clause 50 of the Policy could be an effective remedy.
Access to records
[65] The applicant contends that it
is entitled to have access to the documentation relating to the
decisions taken in respect of
the September 2011 FMT tender. It seeks
the following documentation:
1. all minutes of the Bid Evaluation
and Bid Adjudication Committees, including all reports, memoranda,
score sheets, tender responses
and other documents forming a part of
such minutes and reports;
2. all reports, memoranda and other
relevant documents submitted to the said committees by municipal
officials, directorates and
departments concerning the aforesaid
tender;
3. all written reports and
recommendations of the Bid Evaluation and Bid Adjudication Committee
concerning the aforesaid tender;
4. all written decisions and/or
memoranda prepared by or on behalf of the acting municipal manager of
the third respondent in connection
with the aforesaid tender;
5. all reasons relating to any
decision taken in connection with the aforesaid tender, whether by
the first or second respondents;
and
6. all minutes of the counsel of the
third respondent and/or mayoral committees and/or sub-committees in
connection with the aforesaid
tender.
[66] The respondent opposes this
relief, again, on the basis that it is premature. The respondent
argues that the applicant is not
entitled to such information before
the award of the tender. This argument is closely connected to the
argument relating to ripeness
which I have dealt with above in
respect of the review application. The fifth respondent places
reliance on the decision of
Tetra Mobile Radio (Pty) Ltd v
Member of the Executive Council of the Department of Works and Others
2008 (1) SA 438
(SCA) at 445A-B. I do not think that this decision
provides any authority for the proposition that access to information
will never
be granted prior to an actual decision being taken. The
particular passage to which I was referred relates to the
interpretation
of a particular section of the KwaZulu-Natal
Procurement Act 3 of 2001. In that matter it was held that when the
provisions of
the Procurement Act were read in conjunction with
section 217 of the Constitution the appellant in that matter was
clearly entitled,
in terms of section 20 of the Procurement Act, to
receive such documentation from the time that the tender was awarded.
[67] Once it is accepted, as I have
concluded for purposes of this application that it should be, that
the review proceedings are
not premature and that the applicant has
made out a case for the interim interdict sought, then I think that
the
Tetra Mobile
decision offers greater support for
the applicant’s contention that it is indeed entitled to have
sight of this documentation
in order to properly formulate its
grounds for review. I think that the applicant is entitled thereto.
[68] During the course of argument,
however, Mr
Swanepoel
conceded that there could be no
prejudice to the fifth respondent if documentation relating to the
applicant’s bid were made
available. Mr
Swanepoel
contended, however, that whereas the tender process has not yet been
completed the fifth respondent would be prejudiced if details
of its
bid, in particular its pricing structures, were made available to the
applicant. Mr Buchanan, in turn, was constrained to
concede this
consideration. I consider that the fourth respondent, although it has
not opposed the application, is entitled to
similar protection. In
these circumstances I propose to limit the order in respect of access
to documentation and information as
set out in the order at the
conclusion of this judgment.
Costs
[69] I have had the benefit of full
argument on behalf of the applicant and the fifth respondent in
respect of the appropriate costs
order to be made and in addition
each of them have taken the opportunity to file further heads of
argument in respect of the appropriate
costs order.
[70] By virtue of the conclusions to
which I have come above I consider that the applicant has been
substantially successful in
the application launched and should be
entitled to the costs of the application for interim relief and for
access to records.
[71] In the result I make the
following order:
1. (a) A rule
nisi
will issue
returnable on 5 April 2012 at 10h00, or as soon thereafter as counsel
may be heard, calling upon the respondents to
show cause, if any, why
a final order should not be granted:
(i) that the first, second and third
respondents be interdicted from awarding the September 2011 Financial
Management Tool Tender
(tender number SCM337/2011- 2012)(the
“tender”) to the fourth or fifth respondents and
interdicting the first, second
and third respondents from concluding
any agreements with the fourth or fifth respondents to perform any
work in terms of the tender
until the final determination of the
pending review application;
(ii) that the third respondent pay
the costs occasioned by this application, alternatively, that the
third respondent, jointly and
severally with such further respondents
as may oppose the application, pay the costs of the application.
(b) The order referred to in
paragraph 1(a) above shall operate as an interim interdict with
immediate effect pending the return
day of the rule
nisi
.
(c) The third respondent and the
fifth respondents are ordered, jointly and severally, the one paying
the other to be absolved,
to pay the costs occasioned by the
application for the interim interdict referred to in paragraph 1(b)
above.
2. (a) The first, second and third
respondents are ordered to provide to the applicant, subject to
paragraph 2(b) below, within
three (3) weeks from the date of this
order, all documentation relating to decisions taken in respect of
the aforesaid tender,
which documentation is to include the
following:
(i) all minutes of the Bid
Evaluation and Bid Adjudication Committees, including all reports,
memoranda, score sheets, tender responses
and other documents forming
a part of such minutes and reports;
(ii) all reports, memoranda and
other relevant documents submitted to the said committees by
municipal officials, directorates and
departments concerning the
aforesaid tender;
(iii) all written reports and
recommendations of the Bid Evaluation and Bid Adjudication Committees
concerning the aforesaid tender;
(iv) all written decisions and
memoranda prepared by or on behalf of the Acting Municipal Manager of
the third respondent in connection
with the aforesaid tender;
(v) all reasons relating to any
decision taken in connection with the aforesaid tender, whether by
the first or second respondents;
and
(vi) all minutes of the council of
the third respondent and mayoral committees and sub-committees in
connection with the aforesaid
tender.
(b) The first, second and third
respondents are directed to exclude from the aforestated
documentation, alternatively, to block
out in the aforesaid
documentation all information supplied by the fourth respondent
and/or the fifth respondent in their bids
which may put either of the
said respondents at a disadvantage in the bid process or prejudice
them in commercial competition and
in particular the first, second
and third respondent are ordered to omit or delete any information
relating to the pricing structures
of the fourth respondent and the
fifth respondent’s bids.
(c) The costs occasioned by the
application for access to information and reasons are reserved.
______________________
J W EKSTEEN
JUDGE OF THE HIGH COURT
Appearances:
For Applicant:
Adv R Buchanan
SC instructed by Van Wyk Attorneys, Port Elizabeth
For 1
st
,
2
nd
&
3rd Respondents:
Adv Gqamana
instructed by Ketse Nonkwelo Inc, Port Elizabeth
For 4
th
Respondent:
No appearance
For 5
th
Respondent:
Adv M Swanepoel SC instructed by Schoeman
Oosthuizen Inc, Port Elizabeth