IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No: 59/2024
In the matter between:
H & I CIVIL & BUILDING (PTY) LTD First Applicant
H & I CONSTRUCTION (PTY) LTD Second Applicant
and
THE CITY OF CAPE TOWN First Respondent
WILSON BAYLY HOLMES – OVCON LIMITED
Second Respondent
CVS CONSTRUCTION (PTY) LTD Third Respondent
ASLA CONSTRUCTION (PTY) LTD Fourth Respondent
BASELINE CIVIL CONTRACTORS (PTY) LTD
Fifth Respondent
MARTIN & EAST (PTY) LTD Sixth Respondent
POWER CONSTRUCTION (PTY) LTD Seventh Respondent
RUWACON (PTY) LTD Eighth Respondent
Coram: Justice J Cloete
Heard: 18 January 2024, supplementary notes delivered on 22 and 23 January 2024
Delivered electronically: 30 January 2024
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JUDGMENT
CLOETE J:
Introduction
[1] This application, which is opposed by the first respondent (“City”) was launched
on 8 January 2024. It is comprised of two parts. Part A came before me on the
urgent motion court roll on 18 January 2024. The applicants carry on business in
the building and construction industry, engaged in the construction of buildings,
public roads and bridges, their maintenance, and related or similar large scale
engineering projects throughout South Africa. On the undisputed evidence they
are largely dependent for their economic survival on work derived from various
governmental agencies, including local government agencies such as the City,
through public procurement. The City, the Provincial Government of the Western
Cape and the South African National Roads Agency Ltd (“SANRAL”) are their
biggest clients.
[2] The second to eighth respondents have been cited by virtue of their interest in
the application as other contractors in the industry, and potential tenderers for the
tenders which are the subject matter of the application. The similarly
unchallenged evidence of the applicants is that these respondents also have an
interest, as they themselves do, in the lawfulness and validity of the City’s new
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scoring system for the awarding of (at least) these types of tenders. These
respondents did not participate in the hearing before me.
[3] In Part A of the notice of motion the following urgent relief is sought, namely that
pending the determination of the review relief in Part B, the City be interdicted
from proceeding with the adjudication and award of two tenders ‘…in accordance
with the tender scoring system for the awarding of preferential procurement as
advertised by it respectively during September and October 2023 (“the new
scoring system”)’. In Part B the applicants seek to review two decisions by the
City (on a semi -urgent basis). The first is the decision taken during or about
September 2023 to implement the new scoring system for the tenders, and the
second is that taken on or about 21 December 2023 dismissing the applicants’
internal appeal(s) against the first decision.
Relevant factual background
[4] The two tenders are as follows. Tender no 54Q (I will use the abbreviated version
for both) is for the redecoration, alteration, additions to and construction of new
buildings and structures for Maintenance, Safety & Security and other City
facilities. Ten der no 91Q is for the construction of the IRT Metro South- East
corridor (Phase 2A) stations infrastructure.
[5] The first applicant submitted a conditional tender in respect of 54Q in which it
recorded its objections to the new scoring system and requested the City to revert
to the previous scoring system for preferential procurement points. This tender
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closed on 27 October 2023. It is presently being adjudicated by the City’s Supply
Chain Management Adjudication Committee (its “BAC”) and the City has refused
to accede to the first applicant’s aforementioned request. From the
correspondence it appears that the City has formed the view that the first
applicant’s bid is non-compliant due to the condition it attached to its bid.
[6] The second applicant wishes to tender for 91Q in a joint venture with the first
applicant, in which the second applicant will be the major partner. The closing
date for submission of bids at the time this application was launched was
26 January 2024. After service of the application the City decided it would be
prudent to extend the closing date to 16 February 2024 for the following reason:
‘The postponement will give the City’s Bid Specification Committee sufficient time
to issue a possible notice to prospective tenderers based on the outcome of the
above referenced court hearing. The closing date postponement is proposed to
mitigate against the risk of possible cancellation of the current process.’
[7] In the founding affidavit the applicants state their complaint stems from the
amendment to the City’s Supply Chain Management Policy (“SCMP”) that led to
the formulation and implementation of a new Preferential Procurement Policy (the
“new policy”) by which “Specific Goals” may be identified for tenders , and
preference points are awarded in respect of such goals. This they refer to as “the
new scoring system” which differs from that previously used for the awarding of
B-BBEE preferential procurement points. They learnt, subsequent to the
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invitations to bid being advertised, that the City’s SCMP had been amended on
26 January 2023 by the introduction and incorporation of the new policy.
[8] They state they only became aware of the new scoring system when the first
applicant considered the 54Q tender document on about 29 September 2023 for
purposes of preparing its bid. The first applicant was then advised by its lawyers
to submit a conditional bid in the hope of persuading the City of what the
applicants consider to be an unlawful new scoring system. The second applicant
raised a similar complaint with the City when 91Q was advertised. Their legal
advice was also that they needed to exhaust any available internal appeal
mechanism before approaching court. As previously stated their internal appeals
were dismissed on about 21 December 2023 and this application was launched
on 8 January 2024. It was served on the City on the following day, 9 January
2024. It is common cause that the value of each tender exceeds R50 million.
The previous and new scoring systems
[9] Prior to the amendment of the City’s scoring system, points were awarded on the
basis of a tenderer’s B-BBEE scorecard measured in terms of the Broad Based
Black Economic Empowerment Act 1 (the “Empowerment Act”). Of the 100%
scorecard points for tenders with a value of more than R50 million, 10% related
to B -BBEE status (“empowerment score”) and the balance of 90% to other
requirements. The highest empowerment score would be a level one contributor
1 No 53 of 2003, as amended by Act 46 of 2013.
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who would get 10 out of 10 for that 10%. On the undisputed evidence the City
has been satisfied for a number of years that both applicants qualified as level
one contributors (and likewise for tenders for a value of less than R50 million for
which 20 points equate to level one).
[10] The new scoring system has introduced a different method to achieve that 10%
which the applicants say is a fundamental departure from the measuring in terms
of the Empowerment Act. As I understand it what the City has introduced is a
system which, to achieve that 10%, involves awarding 3 points for sole women
ownership, 3 points for sole black ownership, 1 point for sole disabled person
ownership and 3 points for promotion of micro and small enterprises , which is
basically subcontracting to persons who fall within the first 3 categories, but not
on proven track record. (Naturally a tenderer will receive a lower score on a
reducing sliding scale should there be a lesser degree of ownership in the first 3
categories).
[11] Both applicants are wholly owned subsidiaries of H & I Group (Pty) Ltd (“HIG”) .
Again on the undisputed evidence, and according to the applicants:
‘119. HIG has a strong philosophy of empowering its staff. This is achieved
through an employee share incentive trust which holds equity in HIG (the
holding company of the various companies in the group). This equity is
held by three shareholder groups, one of these is the H & I Broad-Based
Employee Trust (“HIBBET”), that was formed in 2006, when a portion of
HIG’s shares was sold to HIBBET at par value.
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120. This gift of shares to the HIBBET in 2006 was valued at R33.9 million.
This set a benchmark within the industry for proper Broad-Based Black
Economic Empowerment.
121. Every permanent employee in Haw & Inglis Civil Engineering (Pty) Ltd
(“HICE”), the applicants, a third wholly owned subsidiary, and H & I Plant
& Crushing (Pty) Ltd, a fourth wholly owned subsidiary, with more than
two years’ service, enjoys an equity stake in the business as beneficiaries
of HIBBET.
122. Because 32.7% of HIG’s shares are owned by an employee trust for the
benefit of employees in the group, and even though the vast majority of
these beneficiaries of the trust are black , Applicant [presumably both
applicants] is not a 100% black owned business, one of the scoring
requirements which has been introduced… for the awarding of tenders in
general, and is to be used by [the City] for the awarding of the tenders in
the present case.
123. The elevation of this requirement to 30% of the 10% or 20% of the marks
for preferential procurement, with a further 30% of the score to be
awarded for women ownership, and 10% of that score for physically
disabled shareholders, and the introduction of sub-contracting of the
intended work as part of the scoring for the tender award itself (as to a
maximum of the balance of 30% of that part of the score) renders it
commercially and practically impossible for companies such as the
Applicants to compete for the work which forms the subject of the tenders
against other companies who need only satisfy some of these
requirements and need only promise to meet the sub-contracting
requirement…
130. To date the beneficiaries of HIBBET, with more than 85% being black
employees, have received over R132 million…
134. Notwithstanding the fact that it has the highest possible rating, which
would have secured it 10 points in the past on the… preferential procuring
scoring system for the award of tenders under the 90/10 system, in terms
of the new scoring system… Applicants will get no score for its level 1 B-
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BBEE ranking, rendering its B -BBEE achievements under the Code [the
Construction Sector Code promulgated under the Empowerment Act] for
which it has worked so hard in the past negligible if not nugatory…’
[12] At the heart of the applicants’ complaint is the interplay between the
Empowerment Act and the Preferential Procurement Policy Framework Act2 (the
“Procurement Act”). Section 3 of the Empowerment Act provides that:
‘3. Interpretation of Act.—(1) Any person applying this Act must interpret
its provisions so as—
(a) to give effect to its objectives and purposes; and
(b) to comply with the Constitution.
(2) In the event of any conflict between this Act and any other law in force
immediately prior to the date of commencement of the Broad-Based Black
Economic Empowerment Amendment Act, 2013, this Act prevails if the conflict
specifically relates to a matter dealt with in this Act.’ (my emphasis)
[13] The amendment Act referred to in s3(2) came into effect on 24 October 2015.
The Procurement Act came into effect 5½ years earlier on 3 February 2000.
Accordingly on the plain wording of s 3(2) if there is a conflict between the two
the Empowerment Act prevails. The applicants contend the new scoring system
is based on a preference for the Procurement Act which, apart from being
irrational, renders it unlawful.
2 No 5 of 2000.
9
[14] In its answering affidavit the City interprets the applicants’ complaint as follows:
‘39.1 The applicants contend that a bidder ’s B -BBEE ranking level should
determine all of the preferential procurement points awarded. If this is the
case, an organ of state will have no discretion at all to advance certain
goals. The approach would be inconsistent with section 217(2) of the
Constitution, section 2(1) of the PPPFA and the 2022 regulations to the
PPPFA.
39.2 It would render the discretion afforded to the organ of state meaningless,
and it is not supported by the law.
39.3 The City’s formulation does not exclude a bidder’s B-BBEE credentials. It
forms part of the scoring system, but it is not dispositive of the entire
scoring system. The City also advances gender, disability and the
promotion of micro and small enterprises as goals.
39.4 There is no reason at all why the City cannot advance these goals,
particularly considering that its advancement is contemplated by section
2(1)(d) of the PPPFA.’
The applicants’ case
[15] The applicants say they are compelled to bring this application principally for two
reasons:
15.1 The new scoring system is not only fundamentally flawed for the above
reasons but is also unlawful when regard is had inter alia to s 217 of the
Constitution, the Empowerment Act and the Procurement Act; and
15.2 The City has breached their right in s 33 of the Constitution to fair
administrative action, and in so doing has also failed to consider the
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applicants’ legitimate expectation that the new scoring system would not
be unilaterally adopted without, at least, first consulting with and giving
them a hearing.
[16] The applicants accept that the requirement in s 217(1), namely organs of state
(of which the City is one) must contract for goods and services in accordance
with a system which is fair, equitable, transparent, competitive and cost effective,
is subject to the proviso in s 217(2) that an organ of state is nonetheless entitled
to implement a procurement policy providing for: (a) categories of preference in
the allocation of contracts; and (b) the protection or advancement of persons, or
categories of persons, disadvantaged by unfair discrimination.
[17] As I understand it, their point is that the City’s new scoring system does not meet
the main threshold requirement in s 217(1) and further does not comply with the
legislative framework which s 217(3) prescribes be in place to give effect to
s 217(1) and (2). As previously stated, they contend that changing the previous
scoring system based on the Empowerment Act to a new one based on a
preference for the Procurement Act is wrong as a matter of law, and thus
unlawful.
The City’s grounds of opposition to the Part A Relief
[18] In its answering affidavit the City says the applicants’ case for the relief sought in
both Parts A and B fails to leave the starting blocks (the Part B relief is obviously
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relevant because if the case made out for that relief has no merit then the
applicants cannot succeed in Part A).
[19] The City contends that:
19.1 First, the urgency is self-created (“not urgent”) since on their own version
the applicants were aware of the manner in which “the tender” would be
evaluated as early as 29 September 2023. This is a reference to 54Q (the
first advertised tender). It maintains the applicants’ delay cannot be
excused by having first exhausted a subsequent internal appeal remedy
since there was no decision to be appealed against; but in any event the
delay between 21 December 2023 and 8 January 2024 is unaccounted
for;
19.2 Second, the case for interim interdictory relief is premised only on the right
to a fair administrative process in circumstances where the Constitutional
Court has repeatedly made clear that such a right may not be relied upon
for purposes of an interim interdict;
19.3 Third, the applicants have not met the “exceptional circumstances in the
clearest of cases” OUTA test
3 which is the threshold for interim interdictory
relief when an organ of state exercises a public or statutory function;
3 National Treasury v Opposition to Urban Tolling Alliance 2012 (6) SA 223 (CC).
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19.4 Fourth, the other requirements for the interim relief sought have not been
established; and
19.5 Fifth, Part B is incompetent as a matter of law because the applicants have
challenged the wrong decisions and even if that relief was ultimately
granted, it would have no practical effect.
Discussion
Urgency
[20] The City’s protestations ring hollow. On the undisputed facts, on 15 November
2023 it specifically drew the applicants’ attention to clause C 1.6.5 of the 54Q
tender document and informed them that they were to ensure compliance
therewith. That clause deals inter alia with the procedure to be followed for an
internal appeal in terms of s 62 of the Local Government: Municipal Systems Act
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which provides that:
‘[1] A person whose rights are affected by a decision taken by a political
structure, political office bearer, councillor or staff member of a
municipality in terms of a power or duty delegated or sub-delegated by a
delegating authority to the political structure, political office bearer,
councillor or staff member, may appeal against that decision by giving
written notice of the appeal and reasons to the municipal manager within
21 days of the date of the notification of the decision.
4 No 32 of 2000.
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[2] The municipal manager must promptly submit the appeal to the
appropriate appeal authority mentioned in subsection (4).
[3] The appeal authority must consider the appeal, and confirm, vary or
revoke the decision…; …
[5] An appeal authority must commence with an appeal within six weeks and
decide the appeal within a reasonable period…’
[21] The applicants duly complied with the City’s unequivocal notification to pursue
the internal appeal process and submitted the appeal(s). The City, as a fact,
entertained the appeal(s) and dismissed them on about 21 December 2023. As
to the communication of 15 November 2023 the appeal authority took the view
that this was merely a “response”; 54Q had not yet been adjudicated and the
appeal was thus premature. As to the second applicant, the appeal authority
found there was no compet ent appeal since no bid had yet been submitted. In
my view both of these were administrative decisions, action which stands until
set aside.
[22] It is not necessary for me, in the context of urgency, to determine whether or not
the City was correct in its approach in its communication of 15 November 2023.
All that I need find at this stage is that the City itself certainly thought it was, and
the appeal authority subsequently entertained both appeals before reaching its
decision(s). For the City to now suggest, in the face of its communication of
15 November 2023, that this was just a “response” and not a clear instruction to
the applicants to utilise the internal appeal process (which could only have been
as a result of an earlier decision) is just contrived.
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[23] Accordingly the applicants cannot be criticised for undue delay in launching their
application. They became aware on 21 December 2023 that the BAC was
proceeding with the adjudication of 54Q and also knew that the closing date for
94Q at the time was 26 January 2024. The period between 21 December 2023
and 8 January 2024, being the height of the festive season, consisted of six
working days in all, and the matter is not straightforward. The applicants acted as
expeditiously as reasonably possible in the circumstances. I am thus persuaded
that the applicants have established the requisite degree of urgency for the Part
A relief.
Whether the correct decision has been challenged
[24] The City’s position that the wrong decision has been challenged by the applicants
centres on the Part B relief, namely the review and setting aside of: (a) the City’s
decision taken in about September 2023 to implement the new scoring system
for the tenders; and (b) the City’s decision to dismiss the applicants’ inter nal
appeal(s) on about 21 December 2023. In its answering affidavit the City says
that Part B is incompetent as a matter of law, for at least two reasons:
24.1 First, the applicants seek to review and set aside the decision to implement
the new scoring system. They do not seek to set aside the policy which
adopts it. The applicants cannot review the decision to implement the new
system without challenging the lawfulness of that system as a whole. The
new scoring system was adopted by the City’s Municipal Council on
26 January 2023. It is therefore legislative action disciplined by the
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Constitution and the principle of legality, and not by administrative action.
It must be applied by the City since otherwise this would contravene the
principle of legality. The courts have repeatedly made clear it is
incompetent to challenge the implementation of a policy, without first
challenging the underlying policy; and
24.2 Second, the applicants have failed to challenge both tender s. The relief
sought in Part B seeks only to set aside the decision to implement the new
scoring system. Accordingly, even if the Part B relief is granted, the
tenders will continue to exist because the applicants have not sought to
set them aside. The City’s decision to tender for the services required will
nonetheless remain valid and lawful in accordance with the Oudekraal
principle. The Part B relief will therefore have no practical effect because
the tenders will remain in place.
[25] In the founding affidavit the applicants set out their position as follows:
‘29. … I state that although it is the [City’s] decision to use a new
preferential procurement scoring system for the evaluation and
adjudication of these tenders which has given rise to the present
application, it is the new scoring system itself which forms the
subject of the intended review under PAJA…
32. The focus of the present application is on the new scoring system
which [the City] has indicated it will be using to award both the
tenders in question. It is not aimed at any future evaluation or
adjudication of the tenders themselves: it is directed at the new
scoring system which is to be employed in the tenders…
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180. The appeal authority misconstrued the nature of the Applicants’
appeals – the appeals were not against the outcome of the
tenders but rather against [the City’s] decision to introduce a new
procurement policy and apply a new preferential procurement
policy/scoring system in respect of those tenders.’
[26] The parties were given the opportunity to provide short supplementary notes on
the issue. In the applicants’ note Mr Stelzner SC submitted that the relevant
decisions identified, namely those taken by City officials to change the previous
scoring system based on the Empowerment Act to a new one based on a
preference for the Procurement Act, were administrative actions and thus
susceptible to review under PAJA.
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[27] He further submitted that the applicants have shown there are serious questions
of law to be determined at the hearing of Part B, which relief is only foreshadowed
for purposes of Part A, since once the City provides the rule 53 record the
applicants will be in a position to supplement their papers and if needs be amplify,
clarify or amend their Part B relief.
[28] Mr Stelzner also pointed out that in the founding affidavit, when referring to the
City’s decision to amend the SCMP on 26 January 2023, the applicants did say
that:
‘82. Insofar as the current challenge should have been raised then already,
and to the SCMP itself, the Applicants respectfully seek condonation for
5 Promotion of Administrative Justice Act 3 of 2000.
17
any late bringing of this application to this Court under PAJA…’ (my
emphasis)
[29] In the City’s supplementary note Mr Katz SC and Mr Perumalsamy summed up
its stance on the issue as follows:
‘4. The applicants do not properly challenge the scoring system. The City
submits that there are three separate, underlying and conclusive bases
to this answer:
4.1 First, paragraph 2.1 of Part B [this is the September 2023 decision
to implement the new scoring system] does not challenge the
decision to determine the scoring system for the tenders;
4.2 Second, even if it does, the SCM policy must still be challenged;
and
4.3 Third, in any event neither… overcome two i nsurmountable
hurdles for the applicants: (a) their failure to challenge tender
invitations 54Q and 91Q; and (b) their inability to demonstrate that
the Broad-Based Black Economic Empowerment Act… repeals
the PPPFA and its regulations by implication.’ (their emphasis)
[30] In order to keep one’s eye on the ball, as it were, I bear in mind the following. The
crux of the main dispute is the City’s new scoring system. Without the benefit of
the rule 53 record the applicants are constrained to target decisions of which they
are aware. These are that in 54Q and 94Q there is a new scoring system which
the applicants seek to challenge primarily on the ground of unlawfulness.
[31] In the answering affidavit the City gave two conflicting accounts of how the new
scoring system came to be adopted. In paragraph 8.12.2 (the content of which I
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referred to earlier) it said the new scoring system was adopted by its Municipal
Council on 26 January 2023. It is therefore legislative and not administrative
action. This was repeated at paragraph 17.1. However when dealing with the
background to the new scoring system later in the affidavit, the City said at
paragraph 33:
‘The amendment adopted by Council on 29 January 2023 [I will accept that the
date was 26 January 2023] to the SCM Policy, sets out the City’s preferential
procurement policy. The City has a discretion to promote certain goals in a
particular tender, including the goals identified in section 2(1)(d) of the PPPFA ’.
(my emphasis)
[32] The amendment to the SCMP adopted on 26 January 2023 indeed sets out the
new policy. What it does not do is set out the new scoring system under the new
policy. Item 457 reads as follows:
‘The tender document must stipulate –
457.1 The applicable preference point system as envisaged in Preferential
Procurement Regulations 4, 5 , 6 or 7; and
457.2 The specific goal in the invitation to submit the tender for which a point
may be awarded, and the number of points that will be awarded to each
goal, and proof of the claim for such goal.’
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[33] In Educare6 the Constitutional Court, referring to SARFU,7 confirmed that
‘[18]… in order to determine whether a particular act constitutes administrative
action, the focus of the enquiry should be on the nature of the power exercised,
not the identity of the actor… Policy may be formulated by the executive outside
of a legislativ e framework… The formulation of such policy involves a political
decision and will generally not constitute administrative action. However, policy
may also be formulated in a narrower sense where a member of the executive is
implementing legislation. The formulation of policy in the exercise of such powers
may often constitute administrative action.’
[34] The court continued:
‘[19] If it is decided that the exercise of the statutory power does constitute
administrative action, the enquiry is not ended. It is necessary then to
determine what the Constitution requires. For example, it will be
necessary to decide whether the action has been conducted in a
procedurally fair manner, whether it is reasonable and lawful. Determining
what procedural fairness and reasonableness require in a given case, will
depend, amongst other things, on the nature of the power.’
[35] Currently it is unclear whether the decision to implement the new scoring system
(by its practical formulation) constituted legislative or administrative action in light
of the two contradictory versions put up by the City. This will likely be clarified
6 Permanent Secretary, Department of Education, Eastern Cape and Another v Ed-U-College (PE) (s 21
Inc). 2001 (2) BCLR 118 (CC).
7 President of the Republic of South Africa and Others v South African Rugby Football Union and Others
2000 (1) SA 1 (CC) at para [141].
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once the rule 53 record is provided and the applicants can then supplement their
papers and amend their Part B relief to the extent they consider necessary.
[36] The City relies on Barnard 8 where the Constitutional Court, referring to the
decision of the Supreme Court of Appeal in the same matter, held as follows:
‘[51] With respect, that court misconceived the issue before it as well as the
controlling law. It was obliged to approach the equality claim through the prism
of s 9(2) of the Constitution and s 6(2) of the Act. This is because the employment
equity plan was never impugned as unlawful and invalid. It was not open to the
court to employ the Harksen analysis of unfair discrimination, which presumed
the application of the employment equity plan to be suspect and unfair. At stake
before that court was never whether the employment equity plan was assailable,
but whether the decision the national commissioner made under it was open to
challenge.’
[37] But similarly in the present matter the applicants have not at this stage challenged
the SCMP in its amended form in Part B. They are instead concerned with the
manner in which the City (or rather whichever of its officials) decided to formulate
and consequently implement that policy and more particularly the “specific goal”
decided upon in item 457.2. To interpret their case on the narrow construction for
which the City contends is to place form and semantics over substance.
[38] As to the second attack about the failure to challenge both tenders, on the one
hand the City says the applicants’ challenge is not ripe for hearing because the
8 SAPS v Solidarity obo Barnard 2014 (6) SA 123 (CC) at para [51].
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tender process is not yet complete, but on the other the failure to attack the
tenders themselves is fatal to the applicants’ case. The City cannot have it both
ways. Having regard to all of the aforegoing I am persuaded that the City’s
contention that Par t A can never succeed because Part B is doomed to failure
cannot be accepted.
Whether prima facie right established albeit open to some doubt
[39] The City maintains the only right which the applicants assert is to lawful
administrative action (s 33 of the Constitution) and that, as held in OUTA,
9 the
right to review administrative decisions does not require any preservation
pendente lite. What OUTA held is that:
‘[50] …Quite apart from the right to review and to set aside impugned
decisions, the applicants should have demonstrated a prima facie right that is
threatened by an impending or imminent irreparable harm…’
[40] In addition to their s 33 right the applicants also rely on s 217 of the Constitution.
They say the City’s officials cannot unilaterally decide to override, and require of
the court to turn a blind eye, to the fundamental breach of s 217 from which the
Empowerment and Procurement Acts derive their source. They make the point
that complying with the law is not only in the applicants’ interest, but also in the
9 fn 2 above at paras [49] to [50].
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public interest and indeed the City’s too; and the City of course accepts that its
public procurement processes must comply with the law.
[41] Accordingly Part A seeks to protect the applicants’ right (and those of others) to
participate in a constitutionally compliant and lawful public procurement tender
system, to prevent the Part B relief being rendered nugatory. As previously stated
the applicants and the City are at loggerheads about whether or not the
Procurement Act or the Empowerment Act should take preference in the new
scoring system. This is not a simple legal issue as was amply demonstrated by
their respective arguments, and by the time they concluded counsel for the City
rightly did not suggest otherwise.
[42] In OUTA it was also held that:
‘[44] The common-law annotation to the Setlogelo test is that courts grant
temporary restraining orders against the exercise of statutory power only in
exceptional cases and when a strong case for that relief has been made out.
Beyond the common law, separation of powers is an even more vital tenet of our
constitutional democracy. This means that the Constitution requires courts to
ensure that all branches of government act within the law. However, courts in
turn must refrain from entering the exclusive ter rain of the executive and the
legislative branches of government unless the intrusion is mandated by the
Constitution itself.
[45] It seems to me that it is unnecessary to fashion a new test for the grant
of an interim interdict. The Setlogelo test, as adapted by case law, continues to
be a handy and ready guide to the bench and practitioners alike in the grant of
interdicts in busy magistrates’ courts and high courts. However, now the test must
be applied cognisant of the normative scheme and democratic principles that
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underpin our Constitution. This means that when a court considers whether to
grant an interim interdict it must do so in a way that promotes the objects, spirit
and purport of the Constitution.
[46] …If the right asserted in a claim for an interim interdict is sourced from
the Constitution it would be redundant to enquire whether that right exists…’
(my emphasis)
[43] In Eskom10 the majority of the Constitutional Court held as follows (I accept of
course that Eskom is not an organ of state but the principle established provides
valuable guidance):
‘[249] In Geyser Van Oosten J held that “a legal issue should only be decided
at the interlocutory stage of the proceedings if it would result in the final disposal
of either the matter as a whole or a particular aspect thereof”.
[250] I take the view that it does not help to be categorical one way or the other
on this. The approach to be adopted must be dictated by the circumstances of
each case. Sight should not be lost of the fact that a substantial number of
applications for interim relief are brought by way of urgency. There is much to be
said for the view that a judge sitting in a busy urgent court does not have as much
time as does a judge who hears trials or decides non-urgent opposed matters.
Although each judge must strive for the attainment of the best possible outcome
in the circumstances, this reality cannot be ignored. Of course, this is not an
invitation to judges considering urgent interim interdicts to avoid deciding legal
questions which – with the necessary diligence – are capable of definitive
decision.
[251] There are legal questions that are capable of easy resolution to any judge
worth their salt. Those must be decided definitively. If, as a matter of law, the
right asserted by the applicant for interim relief is held not to exist at all, that will
be the end of the matter. And that will result in a saving in costs as there will be
10 Eskom Holdings SOC Ltd v Vaal River Development Association (Pty) Ltd and Others [2022] ZACC 44.
24
no subsequent litigation. On the other hand, the legal right may definitively be
held to exist as a matter of law and all that may remain for determination at the
later proceedings may be whether, on the facts, the applicant has made out a
case. There may also be those circumstances where – either because of a
combination of factors that include the complexity of the legal question, its
novelty, little or no assistance from the litigants’ argument, the speed with which
the outcome is required and lack of sufficient time for the judge to consider the
matter as best they can – the judge may not be in a position to reach a definitive
decision on a legal question. In Johannesburg Municipal Pension Fund Malan J
held:
“Impressive and erudite arguments were addressed to me on all these grounds.
I cannot do justice to all the considerations referred to. All the issues referred to
involve ‘difficult questions of law’ and none of them can be described as
‘ordinary’. Nor is it desirable to rule at this interim stage that there is no prospect
of success on any of these bases of review. The issues are simply too involved
(‘a serious question to be tried’) and of such gravity that they cannot be, and
should not be, disposed of in these interim proceedings. The City has disavowed
reliance on the notices purporting to amend Notice 6766 and I do not intend
dealing with their validity, but accept for the purposes of this judgment the
applicants’ contentions.”
I see no legal impediment to a judge in such circumstances reaching a conclusion
that says there is enough pointing to the determination of the legal question in
the applicant’s favour in the envisaged later proceedings.’
[44] In my view there is ‘ presently enough pointing to the determination of the legal
question in the applicant’s favour ’ in Part B, particularly given s 3(2) of the
Empowerment Act. Whether or not the City has complied with s 217 in introducing
its new scoring system will be determined in Part B and it is in this respect that
“some doubt” may lie.
25
Whether remaining requirements for interim interdictory relief met
[45] In argument Mr Katz submitted the applicants have approached court purely in
their own commercial interest, and this should not be a factor when considering
balance of convenience and irreparable harm. It was also submitted the
applicants will suffer no harm at all if Part A is refused, because they are entitled
to approach court in due course seeking to set aside the tenders and any award
made following their evaluation and adjudication.
[46] The City further contends that serious consequences would arise from the grant
of an interim interdict. First, it will prevent the City from conducting repairs and
maintenance projects that are planned for the next three years. This will directly
affect service delivery s ince “critical” infrastructure cannot be repaired and
maintained (although the City provided no details). Second, an interdict against
the evaluation and adjudication of 91Q will likely result in its cancellation. If the
tender is cancelled the City is “unlikely” to obtain the grant funding which currently
exists for “the tender” in excess of R7 billion. The evidence put up by the City is
that this “budget” is divided across each financial year until 2027/ 2028 and that,
if it is not able to spend the grant funding allocated because the procurement
process is stymied, it will lose that funding. However the City relies on a letter
from National Treasury dated 11 December 2020 to the effect that should the City
underspend on its allocation in any given year, there is no guarantee that the
funds will continue to be available. This does not equate to automatic forfeiture.
26
[47] On the other hand the undisputed evidence of the applicants is the effect of the
employee shareholding via HIBBET is that between 450 and 500 black
employees benefit from the dividends HIG is able to declare as a consequence
of profits generated by work. These employees’ livelihoods will be directly
adversely affected if the applicants are not afforded interim protection and the
court hearing Part B finds the applicants have been correct all along.
[48] Of course one does not know, if they succeed with the Part B relief, whether the
applicants will ultimately be the successful bidders, but the uncontroverted
evidence of their long successful history on this score cannot simply be ignored.
In addition Mr Stelzner made the valid point that if the Part A relief is refused, it
is open to the court hearing Part B to exercise its discretion to refuse that relief
solely on the basis that the harm will already have been done at that stage.
[49] To my mind the short answer to all of this is the applicants’ undertaking to have
the relief sought in Part B determined on a semi -urgent basis. This is clearly in
the interests of all parties concerned; and, as I have indicated, the letter from
National Treasury relied on by the City does not state, as it contends, that it will
definitely lose the grant funding if the impugned tenders do not proceed as
currently scheduled. I accept that the effect of an interim interdict may have
serious consequences for the City in the short term, but the right to participate in
a lawful procurement process, enshrined in our Constitution, must surely trump
potential financial and other prejudice to the City on an interim basis . Finally,
having regard to all of the aforegoing, I am persuaded that, in respect of the
27
balance of convenience element, the applicants have also met the exceptional
circumstances threshold laid down in OUTA.
[50] The following order is made:
1. Pending the determination of Part B of this application, the first
respondent is interdicted and restrained from proceeding with the
adjudication and the award of:
1.1 Tender no. 54Q/2023/24 (which is for the redecoration, alteration,
additions to and construction of new buildings and structures for
the Maintenance, Safety & Security and other City of Cape Town
facilities); and
1.2 Tender no. 91Q/2023/24 (which is for the construction of the IRT
Metro south-east corridor (Phase 2A) stations infrastructure)
(“the tenders”)
in accordance with the tender scoring system for the awarding of
preferential procurement points as advertised by it respectively
during September and October 2023 (“the new scoring system”);
and
2. The costs of Part A shall stand over for determination in Part B.
___________________
J I CLOETE
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For applicants: Adv R Stelzner SC
Instructed by: Von Lieres Cooper and Barlow Attorneys (H Von Lieres)
For 1st respondent: Adv A Katz SC with Adv K Perumalsamy,
Instructed by: DEM5 Inc. (L Mathopo and C Heradien)