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[2022] ZAECQBHC 35
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Nelson Mandela Bay Metropolitan Municipality v Afrisec Strategic Solutions (Pty) Ltd and Others (3712/2016) [2022] ZAECQBHC 35 (27 September 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
Case
No: 3712/2016
In
the matter between:
NELSON
MANDELA BAY
METROPOLITAN
Plaintiff
MUNICIPALITY
and
AFRISEC
STRATEGIC SOLUTIONS (PTY)
LTD
First Defendant
MHLELI
MLUNGISI
TSHAMASE
Second Defendant
TREVOR
HARPER
Third Defendant
HELEN
KEBLE N.O. ESTATE LATE PATRICK KEBLE
Fourth Defendant
ARMIEN
MADATT
Fifth Defendant
SONGEXILE
NKANJENI
Sixth Defendant
NOBUNTU
MGOGOSHE
Seventh Defendant
MZWANELE
LENMOD
NDOYANA
Eighth Defendant
JUDGMENT
IN RESPECT OF SPECIAL PLEAS
BANDS
AJ
:
[1]
The
plaintiff instituted action against the defendants for payment of
certain sums of money, which the plaintiff paid to the first
defendant during the period of November 2013 to September 2014,
across nine separate payments
[1]
in the aggregate of R92,433.301.55. Various causes of action are
formulated against the defendants.
[2]
For present purposes, it is not necessary
to set out the respective causes of action in detail. Insofar as the
first defendant is
concerned, the plaintiff in the first instance
relies on the
condictio indebiti
.
The second cause of action against the first defendant is based on an
alleged intentional; alternatively, negligent misrepresentation.
The
causes of action as against the remainder of the defendants are based
on the defendants’ alleged failure to comply with
their
obligations as employees of the plaintiff.
[3]
When
this matter came before me on the civil trial roll, the parties
requested that I grant an order
[2]
pursuant to the provisions of Uniform Rule 33(4) separating the
issues raised by the respective defendants in their special pleas
[3]
from the remaining issues on the pleadings. The order was duly
granted.
[4]
Whilst
the special pleas are not formulated in identical terms, the purport
of the defences raised therein, on a proper construction
thereof, are
no different. Accordingly, it suffices for present purposes to repeat
the content of the special plea raised by the
first defendant:
[4]
“
2.
The First Defendant pleads that –
2.1
the plaintiff’s decisions to procure goods and services from
the First Defendant, constitutes
administrative actions;
2.2
if the decisions of the Plaintiff to procure services from the First
Defendant, under Contract No. SCM142/S
was incorrect or unlawful,
(which is denied) the Plaintiff was obliged to have initiated Review
Proceedings in terms of the PAJA
and/or the Principle of Legality to
set aside it own alleged unlawful administrative actions;
2.3
until such time as the Plaintiff’s alleged unlawful
administrative actions have been set aside,
the administrative
actions are extant;
2.4
the First Defendant accordingly pleads (without making any admissions
as to liability) that until such
time as the Plaintiff has reviewed
and set aside the alleged unlawful administrative actions, the
Plaintiff has not sustained any
damages viz the First Defendant and
as such, has no claim against the First Defendant.”
[5]
The special pleas are premised on the
correctness of the facts as pleaded by the plaintiff in its
particulars of claim and are,
in essence, as follows.
[6]
On 28 March 2012, the plaintiff invited
tenders under Contract Enquiry Number SCM142/S/2011-2012 for the
“
Supply, Installation and
Maintenance of Enterprise Facilities Management System and Related
Services
.” On 18 July 2012, the
plaintiff advised the first defendant, in writing, of the acceptance
of the first defendant’s
tender “
subject
to the signature by the NMBM and the contractor
[being
the first defendant]
of a formal
contract regarding all terms of the agreement between the parties.
”
Despite the award of the aforesaid tender to the first defendant, no
formal contract was executed by the plaintiff and the
first
defendant. I pause to mention that the existence of such contract
remains in dispute on the pleadings and is not an issue
which I am
called upon to determine in these proceedings.
[7]
Pursuant to the award of the tender, the
plaintiff gave instructions to the first defendant to undertake work,
provide services
and/or to supply goods to the plaintiff. In doing
so, the plaintiff utilised contract number SCM142/S. The further
defendants facilitated
payment of the first defendant’s
invoices rendered under contract number SCM142/S.
[8]
It
is apposite at this juncture to record that the further defendants
are either, former employees of the plaintiff; alternatively,
are
still in the plaintiff’s employ. The second defendant was
formerly employed by the plaintiff as the Project Manager:
Integrated
Public Transport System. The third defendant is employed by the
plaintiff as its Chief Financial Officer. The fourth
defendant,
[5]
prior to his demise, was employed by the plaintiff as its Director:
Facilities. The fifth defendant succeeded the fourth Defendant
as the
Plaintiff’s Director: Facilities. The sixth defendant is
employed by the plaintiff as its Contracts Controller in
the Supply
Chain Management Unit. The eighth defendant is employed as the
Executive Director: Corporate Administration by the plaintiff.
[9]
The
plaintiff takes issue with the manner in which the facts, as pleaded
by the plaintiff, have been paraphrased by the defendants
in their
respective special pleas. The plaintiff avers, for example, that
insofar as the second and fourth defendants record that
the
plaintiff’s “
decision
”
to procure services from the first defendant, under contract number
SCM142/S, constitutes administrative action, the plaintiff
did not
plead any such decision.
[6]
Similarly, insofar as the first defendant contends that it was
averred by the plaintiff that it “
utilised
”
contract number SCM142/S to procure goods and services from the first
defendant, no such decision is pleaded. Accordingly,
the plaintiff
contends that inasmuch as the defendants conclude that the plaintiff
pleaded a decision, which it did not, such decision
being a
sine
qua non
of
each of the special pleas, the special pleas fall to be dismissed on
this ground alone. I do not agree.
[10]
The main thrust of the plaintiff’s
argument is that after pleading the series of events which occurred
after the resolution
of the Bid Adjudication Committee, the plaintiff
set out various steps taken
inter alia
by the defendants. The plaintiff contends that it did not plead that
any one of such steps constituted a decision, nor is it a
necessary
implication of the facts pleaded.
[11]
Paragraph
68.3 of the plaintiff’s particulars of claim records as
follows:
[7]
“
all
instructions given by the Plaintiff to the First Defendant and/or all
orders placed by the Plaintiff with the First Defendant
to undertake
work, provide services or to supply goods giving rise to the
submission by the First Defendant to the Plaintiff of
the invoices
and giving rise to the first to nineth payments were unlawful;
”
[12]
The instructions to which the plaintiff
refers in paragraph 68.3 are pleaded in paragraphs 46 to 64 of the
plaintiff’s particulars
of claim. By way of example, paragraph
46 reads as follows:
“
46.
On or about 26 November 2013, the amount of R471 836,99
including VAT (“the first payment”), was
paid by the
Plaintiff to the First Defendant by means of electronic funds
transfer (“EFT”). A copy of the remittance
advice
reflecting this transaction is annexed hereto as POC14. The first
payment was preceded by the following:
46.1 On or about
10 September 2013, at the request of the Second Defendant, the First
Defendant provided to him a budget estimate
for the relocation of the
Integrated Public Transport Operations Centre and the IPTS offices to
the South End Fire Station Building
(a copy of which is annexed
hereto marked POC15).
46.2 On or about
27 September 2013 the Second Defendant issued to the First Defendant
a corresponding Contract Services Request
(“CSRD”) with
number 2014CSRD06522 under Tender SCM142/S;
46.3 The First
Defendant submitted to the Plaintiff (for attention by the First
Defendant) invoice number INA 11126 dated
5 November 2013 with the
Plaintiff’s reference 2014CSRD06522 (a copy of which is annexed
hereto marked POC16) for an amount
of R471 836,99 including VAT;
46.4
On or about 14 November 2013 the
Fifth Defendant caused a Contract Payment Certificate number 2014
CNTP09697 (a copy of which is
annexed hereto marked POC17) to be
generated in respect of the First Defendant’s invoice number
INA 11126 under the contract
for “Supply, Installation and
Maintenance of Enterprise Facilities Management System and related
Services” (i.e. Tender
SCM142/S
)
providing for payment by the Plaintiff to the First Defendant of the
sum of R471 836.99 including VAT of R57,944.89. On this
certificate, the Eighth Defendant approved the payment by his
signature thereto.
”
[Own
underlining].
[13]
Implicit in paragraph 68.3 of the
plaintiff’s particulars of claim is that notwithstanding the
failure on the part of the
plaintiff and the first defendant to
execute a formal contract following the award of the tender (as is
accepted for the present
purposes), a decision was taken by the
plaintiff to procure the services of the first defendant to (i)
undertake work; (ii) to
provide services; and/or (iii) to supply
goods to the plaintiff, which, if regard is had to paragraph 46.4 of
the plaintiff’s
particulars of claim, was done “
under
the contract for “Supply, Installation and Maintenance of
Enterprise Facilities Management System and related Services”
(i.e. Tender SCM142/S)”
. I refer
to this decision as the “
procurement
decision
”.
[14]
There is accordingly no merit in the
argument on behalf of the plaintiff that no decision has been
pleaded. Moreover, the attempt
by the plaintiff to distance itself
from the steps taken by its own employees, is in my view, farcical.
[15]
Having established the procurement decision
on behalf of the plaintiff, it remains to be determined whether such
conduct amounts
to administrative action.
[16]
It
is trite that a decision to award or refuse a tender constitutes
administrative action. This is so because the decision is taken
by an
organ of state which wields public power or performs a public
function in terms of the Constitution or legislation and the
decision
materially and directly affects the legal interests or rights of
tenderers concerned.
[8]
Wallis
JA, writing for the Supreme Court of Appeal in
Polokwane
Local Municipality v Granor Passi (Pty) Ltd
[9]
stated as follows:
“
In
my view a decision regarding the implementation of a contract to
which the municipality is a party is an act of administration.
It was
taken by an organ of state, exercising a public power or function in
relation to the enforcement of a contract concluded
in terms of the
empowering provisions governing transactions of this character.”
[17]
In
Calibre
Clinical Consultants (Pty) Ltd v National Bargaining Council for Road
Freight Industry
,
[10]
the following comment of Nugent JA is relevant:
“
Government
and its agencies are expected to be publicly accountable for the
contracts that they conclude because they are spending
public money
and there are two principal reasons why that should be so. In the
first place the public is entitled to be assured
that its moneys are
properly spent. And secondly, the commercial public is entitled to
equal opportunity to benefit from the bounty
of the state to which
they are themselves contributories. The accountability of government
for which procurement is expressly provided
for in s 217 of the
Constitution, which requires that government bodies must contract ‘in
accordance with a system which
is fair, equitable, transparent,
competitive and cost effective’…
”
[18]
Whilst in
Granor
Passi
the decision pertained to the
implementation of a contract which had factually been concluded,
there can be no doubt that the procurement
decision in the present
instance, meets the necessary requirements for it to constitute
administrative action within the ambit
of section 33 of the
Constitution.
[19]
It
is established law that until such time as an administrative action
is set aside by a court in proceedings for judicial review,
it exists
in fact and it has legal consequences that cannot be overlooked.
In
Oudekraal Estates (Pty) Ltd v City of Cape Town & Others,
[11]
the court at paragraph [26] emphasised that:
“
The
proper functioning of a modern state would be considerably
compromised if all administrative acts could be given effect to or
ignored depending upon the view the subject takes of the validity of
the act in question. No doubt it is for this reason that our
law has
always recognized that even an unlawful administrative act is capable
of producing legally valid consequences for so long
as the unlawful
act is not set aside.
”
[20]
The plaintiff itself at paragraph 68.3 of
its particulars of claim concedes that the instructions given by the
plaintiff to the
first defendant and/or all orders placed by the
plaintiff with the first defendant to undertake work, provide
services or to supply
goods giving rise to the submission by the
first defendant to the plaintiff of the invoices and giving rise to
the first to nineth
payments were unlawful.
[21]
It
was incumbent upon the plaintiff to bring review proceedings to set
aside the procurement decision, being a review of its own
decision,
in accordance with the principle of legality.
[12]
Such decision cannot simply be ignored by the plaintiff.
[22]
In
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty)
Ltd
,
[13]
Cameron J at paragraphs [64] and [65] succinctly stated:
“
[64] Can
a decision by a state official, communicated to the subject, and in
reliance on which it acts, be set aside by a court
even when
government has not applied (or counter-applied) for the court to do
so? Differently put, can a court exempt government
from the burdens
and duties of a proper review application, and deprive the subject of
the protections these provide, when it seeks
to disregard one of its
own officials’ decisions? That is the question the judgment of
Jafta J (main judgment) answers. The
answer it gives is Yes. I
disagree. Even where the decision is defective – as the
evidence here suggests – government
should generally not be
exempt from the forms and processes of review. It should be held to
the pain and duty of proper process.
It must apply formally for a
court to set aside the defective decision, so that the court can
properly consider its effects on
those subject to it.
[65] The
reasons spring from deep within the Constitution’s scrutiny of
power. The Constitution regulates all public
power. Perhaps the most
important power it controls is the power the state exercises over its
subjects. When government errs by
issuing a defective decision, the
subject affected by it is entitled to proper notice, and to be
afforded a proper hearing, on
whether the decision should be set
aside. Government should not be allowed to take shortcuts. Generally,
this means that government
must apply formally to set aside the
decision. Once the subject has relied on a decision, government
cannot, barring specific statutory
authority, simply ignore what it
has done. The decision, despite being defective, may have
consequences that make it undesirable
or even impossible to set it
aside. That demands a proper process, in which all factors for and
against are properly weighed.
”
[23]
Until such time that the procurement
decision is set aside, (i) it exists in fact and has legal
consequences that cannot be overlooked;
and (ii) the plaintiff has
not sustained any damages
viz
the
first defendant, and as such, has no claim against the further
defendants.
[24]
I am accordingly of the view that the
special pleas filed on behalf of the first, second, third, fourth,
fifth, seventh and eight
defendants ought to be upheld with costs.
[25]
Insofar as a number of the defendants seek
a dismissal of the plaintiff’s claim on the basis that any
proposed review proceedings
initiated by the plaintiff has no
prospects of success given what they allege to be a deliberate and
inordinate delay, such question
goes beyond the scope of these
proceedings and remains to be determined in the appropriate forum
after being fully ventilated.
[26]
In the circumstances, the following order
is issued:
1.
The first, second, third, fourth, fifth,
seventh and eight defendants’ special pleas are upheld with
costs.
I
BANDS
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For
the plaintiff:
Adv RG Buchanan SC
Instructed
by:
Gray Moodliar Inc, 19 Raleigh Street, Central
For
1
st
defendant: Adv AJR van
Rhyn SC
Instructed
by:
Kramer Wiehmann Inc., KW Building,
24 Barnes Street, Bloemfontein
For
2
nd
defendant: In person
For
the 3
rd
and 5
th
defendants:
Adv P Jooste
Instructed
by:
Kaplan Blumberg Attorneys, Southern Life Gardens, Second Avenue,
Newton Park
For
4
th
defendant: Mr Friedman
Instructed
by:
Friedman Scheckter Attorneys, second Avenue,
Newton Park
For
8
th
defendant: In person
Coram:
Bands AJ
Date
heard:
2 February 2022
Delivered:
27 September
2022
[1]
R471,836.99;
R6,384,000.00; R18,697,889.96; R12,294,486.70; R2,919,368.09;
R17,000,049.19; R28,530,164.40; R2,455,609.02; and
R3,679,897.20
[2]
“
1.
That the questions of law as variously pleaded by the First; Second;
Third; Fourth, Fifth; Seventh
and Eighth Defendants as set out
hereunder, together with the liability for the costs attendant
thereon, be decided separately
in terms of Rule 33(4) at the
commencement of the trial:
1.1
by the First Defendant in
paragraphs 2.1 to 2.4 of its special plea;
1.2
by the Second Defendant in
paragraphs 2.1 to 2.4 of his special plea;
1.3
by the Third; Fifth; and Eighth
Defendants in paragraphs 1.8 to 1.12 of their special plea;
1.4
by the Fourth Defendant in
paragraphs 2.1 to 2.4 of her special plea; and
1.5
by the Seventh Defendant in
paragraphs 2 and 5 of his special plea;
2.
Costs are costs in the cause.
”
[3]
With
the exception of the Sixth Defendant, special pleas were raised by
all defendants.
[4]
Pleadings
bundle p 502d.
[5]
Now
represented herein by the executrix of his estate.
[6]
Pleadings
bundle page 532c at paragraph 2.1, read with 2.2 (in respect of the
second defendant); and pages 588c and 588d at paragraph
2.1, read
with 2.2 (in respect of the fourth defendant)
[7]
Pleadings
bundle page 74.
[8]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121
(CC) at paragraph 21.
[9]
[2019]
2 All SA 307
(SCA) at paragraph 11.
[10]
(410/09)
[2010] ZASCA 94
(19 July 2010) at paragraph 44.
[11]
2004
(6) SA 622
SCA.
[12]
State
Information Technology Agency SOC Limited v Gijima Holdings (Pty)
Limited
2018
(2) SA 23 (CC).
[13]
2014
(3) SA 481 (CC).