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[2023] ZAFSHC 74
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Masakhe Media (Pty) Ltd v Mangaung Metropolitan Municipality and Others (3455/2021) [2023] ZAFSHC 74 (16 March 2023)
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Case No.: 3455/2021
Reportable: YES/NO
Of Interest to other
Judges: YES/NO
Circulate
to Magistrates: YES/NO
In the matter between: -
MASAKHE
MEDIA (PTY) LTD
Applicant
and
MANGAUNG
METROPOLITAN MUNICIPALITY
1
st
Respondent
PROVANTAGE
(PTY) LIMITED
2
nd
Respondent
KP
YOUNG DESIGNERS (PTY) LIMITED
3
rd
Respondent
CORAM:
C. J.
MUSI, JP
et
C. REINDERS, J
HEARD
ON:
14 NOVEMBER 2022
JUDGMENT
BY:
C.
J. MUSI, JP
DELIVERED
ON:
16
MARCH 2023
Introduction
[1]
The applicant, Masakhe Media (Pty) Ltd (Masakhe), sought an order
reviewing and setting
aside the decision of the first respondent,
Mangaung Metropolitan Municipality (Mangaung), to award a tender for
lamppost advertising,
pavement posters and notices to the second
respondent, Provantage (Pty) Ltd (Provantage) and the third
respondent, K P Young Designers
(Pty) Ltd (Young). The applicant is
one of the unsuccessful bidders for the tender. Young did not oppose
the application. Provantage
opposed it and filed a conditional
counter application to the effect that in the event that Mangaung’s
decision is set aside,
that it should not be divested of any rights
which it would have been entitled to under the agreement concluded
between it and
Mangaung during January 2021.
[2]
During March 2018 Mangaung invited bids from prospective tenderers
for the provision
of outdoor advertising in its municipal area under
bid number MMM/BID458:2017/2018 (the tender). Bids closed at 11:30 on
8 May
2018. The bid validity period was for 120 days after the
closing date. The applicant, Provantage and Young submitted bids
before
the closing date. Provantage complied with the bid
requirements and qualified for consideration. Mangaung disqualified
the applicant’s
bid. The reasons for the disqualification are
not germane for the determination of this dispute. Young’s bid
was also found
to be compliant.
[3]
On 17 September 2018 a Mr Mabuza, Mangaung’s General Manager:
Geographic Information
Services, addressed a letter to all
prospective service providers informing them that the bid had not
been disposed of before the
expiry of the validity period. He
indicated that the bid was valid until 8 September 2018 and requested
all the bidders to indicate
whether they are willing to hold their
bids valid until 30 November 2018. The applicant neither received nor
responded to the letter.
Provantage consented to the purported
extension. The bid was extended again to 31 January 2019 and further
extended to 31 May 2019.
[4]
On 8 October 2019, but in a letter dated 13 September 2019, Mangaung
informed Provantage
that it decided to award the latter, amongst
others, 1500 lamppost, pavement posters and notices for the
Bloemfontein and Botshabelo
areas, at a monthly tariff of R166,24 per
unit. Provantange accepted the award. Mangaung subsequently purported
to amended the
award by removing the lamppost, pavement posters and
notices. Provantage objected to the purported amendment and the
original award
was reinstated on 17 November 2020. On 28 January
2021, Mangaung and Provantage concluded a lease agreement.
[5]
With regard to Young, Mangaung informed it on 5 June 2019 that its
bid was accepted
and that it was appointed to a panel of outdoor
advertisers for various categories of advertising, including
lampposts, pavement
posters and notices in Bloemfontein and
Botshabelo. On 9 September 2019, Mangaung wrote a letter to Young
informing it that its
award has been corrected to include 1500
lampposts and other categories of outdoor advertising in the
above-mentioned areas and
Thaba Nchu, Wepener and Dewetsdorp. On 31
August 2021, Mangaung and Young concluded a lease agreement.
[6]
Regulation 2(1) of the Regulations made in terms of s168 of the Local
Government Municipal
Finance Act 56 of 2003 (the MFMA) provides that
each municipality and each municipal entity must have and implement a
supply chain
policy that gives effect to s217 of the Constitution and
the MFMA. The policy must be fair, equitable, transparent,
competitive
and cost effective. Regulation 2(3) states that:
‘
No municipality or
municipal entity may act otherwise than in accordance with its supply
chain management policy when–
(a)
procuring goods and services;
(b)
disposing of goods no longer needed;
(c)
selecting contractors to provide assistance in the provision of
municipal services otherwise than in
circumstances where Chapter 8 of
the Municipal Systems Act applies; or
.(d) in
the case of a municipality, selecting external mechanisms referred to
in section 80(1)(b) of the Municipal
Systems Act for the provision of
municipal services in circumstances contemplated in section 83 of
that Act.’
[1]
[7]
Clause 16.2.6 of Mangaung’s 11
th
Supply Chain
Management Policy (SCMP) states:
’
16.2.6.1
The period for which bids are to remain valid and binding shall be
indicated in the
bid documents. The period is calculated from the
closing time and bids shall remain in force and binding until the end
of the final
day of the period.
16.2.6.2
This period of validity may be extended by mutual consent in writing
between
the Municipality and the bidder, provided that the original
validity period has not expired, and that all bidders shall have an
opportunity to extend such period.
16.2.6.3
In the event that the municipality failed to extend bid validity
period before
its expire date, such extension may be requested and
granted by the City Manager by mutual consent in writing between the
Municipality
and the bidder.
16.2.6.4
If, in exceptional circumstances, it becomes necessary to extend the
bid period,
a notice shall be published in the press at least one
week prior to the original bid closing date. This notice shall also
be posted
on the notice boards at designated Municipal offices, and a
notice to all bidders of bids received at that stage to this effect
shall be issued.
16.2.6.5
In the event that validity period is not indicated in the bid
document or advert,
the validity period shall remain 120 days.’
[7]
It is common cause that the bid validity period had expired when
Mangaung sought to
extend it. It is further common cause that the
City Manager did not grant the extension in terms of clause 16.2.6.3
of the SCMP.
[8]
In
Ekurhuleni
Metro Municipality v Takubiza Trading and Projects CC and Others
[2]
it was said that:
‘…
the
validity period is indeed one of the fundamental ‘rules of the
game’, being the period within which the process
should be
finalised. To extend the tender validity period, the consent of all
the participants to the tender process is required.
Unless there is a
timeous request and favourable response from all the tenderers prior
to the expiry of the tender, the tender
comes to an end.’
[3]
[9]
The upshot is that the decision to award the tender to Provantage and
Young was made
after the tender process came to an end. Mangaung
could not revive the process. A new bid process had to be
initiated.
[4]
This is sufficient
reason to set the awards aside. Before dealing with the remedy I
pause to mention the glaring defects in Young’s
tender
documents.
[10]
The bid document contained minimum requirements and documents to be
attached to the bid documents
of all bidders, which included:
(i)
Valid paper tax clearance certificate, tax clearance reference number
and tax
compliance status pin;
(ii)
Certified copy of company registration certificate reflecting the
names and identity numbers
of active shareholding of all parties;
(iii)
Municipal rates and taxes clearance certificate not older than 90
days or a lease agreement;
and
(iv)
All supplementary/compulsory forms contained in the bid document must
be completed and signed
in full.
[11]
It is stated in the bid document that failure to comply with the
minimum requirements will invalidate
a bid.
[12]
Young’s bid was woefully inadequate and should never have been
considered. Young’s
director signed the necessary forms without
dating them. The issue date on the tax clearance status pin is 18
August 2020. The
certificate of shareholder’s interest, the
Company Registration Certificate from the CIPC and the CSD
registration summary
report from the Central Supplier Data Base for
Government are all dated 11 August 2020. The tender was therefore
awarded to Young
before it submitted all these important documents. I
am therefore not surprised that it decided not to oppose this
application.
The consideration of Young’s unresponsive and
non-compliant tender and the resultant decision to award it the
tender also
rendered the entire process unfair and unlawful.
[13]
In my judgment Mangaung’s decisions are reviewable in terms of
s6 of PAJA
[5]
and ought to be
set aside, at least, because:
(i)
The decision to grant Young the tender was taken in bad faith;
(ii)
A mandatory and material procedure or condition prescribed by an
empowering provision was
not complied with;
(iii)
Its decisions were unfair; and
(iv)
The decisions were not rationally connected to the purpose for which
they were taken and not
rationally connected to the information
before it.
[14]
I now turn to consider the appropriate relief. It is now well
established that every improper
performance of an administrative
function would implicate the Constitution. Section 172(1)(b) of the
Constitution stipulates that:
‘
172
(1) When deciding a
constitutional matter within its
power, a court- …
(b)
may make any order that is just and equitable, including-
(i) an order
limiting the retrospective effect of the declaration of invalidity;
and
(ii) an order suspending
the declaration of invalidity for any period and on any conditions,
to allow the competent authority to
correct the defect.’
[15]
When an administrative act is declared constitutionally invalid, the
aggrieved party would be
entitled to just and equitable relief based
on the facts of each case. In
Steenkamp
[6]
it was explained that:
“…
In each
case the remedy must fit the injury. The remedy must be fair to those
affected by it and yet vindicate effectively the right
violated. It
must be just and equitable in the light of the facts, the implicated
constitutional principles, if any, and the controlling
law. It is
nonetheless appropriate to note that ordinarily a breach of
administrative justice attracts public law remedies and
not private
law remedies. The purpose of a public law remedy is to pre-empt or
correct or reverse an improper administrative function.
In some
instance the remedy takes the form of an order to make or not to make
a particular decision or an order declaring rights
or an injunction
to furnish reasons for an adverse decision. Ultimately the purpose of
a public remedy is to afford the prejudiced
party administrative
justice, to advance efficient and effective public administration
compelled by constitutional precepts and
at a broader level, to
entrench the rule of law.’
[7]
[16]
A Court must therefore weigh all relevant factors in order to decide
what remedy would be just
and equitable. The interests of the
successful bidder, those of the unsuccessful bidder and the public
interest should be considered.
The costs incurred by the successful
bidder in implementing its offer should also be considered.
[8]
Likewise, the cost of ordering a fresh tender is a relevant
factor.
[9]
[17]
Masakhe contends that the awards and resultant contracts should be
set aside and the tender process
restarted. Provantage contends that
it had commenced acting, to its prejudice, in reliance on the lease
agreement. It incurred
costs by removing illegal signage on behalf of
Mangaung and then sunk the costs of installing lampposts. It states
that because
of the low occupancy rate, the reduced scope of the
lease (from 1500 to 600 lampposts), the high fixed rental it
offered Mangaung
and the illegal signage around Mangaung it expects
to break even during the last year of the contract.
[18]
Although Masakhe stuck to its contention that the award should be set
aside it conceded that
Provantage would be prejudiced by such an
order. However, it disputed Provantage’s calculations
substantiating its claim
that it would only break even during year
five of the contract. It pointed out that Provantage ought to reach
break-even stage
during year three.
[19]
I do not deem it necessary to go into the minute details of
Provantage’s projections. It
did not provide the exact figures
of its income during the first year of the contract. When it filed
its affidavit explaining its
income and expenditure it was past the
first year. Initially when it calculated its income it based it on
1500 lampposts while
it knew that despite the award being for 1500
lampposts the lease agreement only made provision for 600 lampposts.
It projected
an income based on 50% occupancy. Masakhe disputed this
and stated that Provantage is under projecting its occupancy rate and
that
50% is unrealistic. It also pointed out that Provantage had more
than 600 lampposts during the first year. It further stated that
it
commissioned a person to do an audit of the lampposts occupied by
Provantage in Mangaung. This revealed an occupancy rate of
59%
percent. Provantage tendered based on a 75% occupancy rate for 1500
lampposts.
[20]
There is no doubt that Provantage entered into agreements with its
clients for advertising space.
It incurred a cost in assisting
Mangaung to remove the illegal signage so that it could commence
sooner with its contract. Although
it stated that the removal of the
illegal signage was at no cost to Mangaung, it included the cost
thereof as an expenditure. This
is fair because it had to pay for the
removal of the illegal structures and it did not charge Mangaung for
the service. The issuing
of a notice to remove illegal signage and
the removal thereof is Mangaung’s responsibility. Its outdoor
advertising policy
makes this clear.
[21]
We can take judicial notice of the fact that 2024 is going to be an
election year. Political
parties and independent candidates would
need advertising space. Provantage has not factored this into their
projections. The demand
would be high during before the elections and
probably immediately thereafter.
[22]
This kind of tender should be distinguished from those in
Allpay
and
Ilex
[10]
.
In both those cases the services were of such a nature that its
disruption would have had catastrophic consequences. In
Allpay
child grants would have been in jeopardy and in
Ilex
HIV Viral load testing would have been stopped imperilling the lives
and livelihood of millions living with HIV/AIDS.
[23]
In this case Mangaung did not ask to be provided with a service in
the conventional sense. It
wanted to lease municipal assets to supply
outdoor advertising. This would have generated much needed income. It
currently earns
R99 744.00 per month from Provantage. However,
the disruption of the service would not have similar consequences as
those
in
Allpay
and
Ilex
.
[24]
Mangaung would have to run a new tender process in respect of the
award to Young, which we intend
to set aside. In that process it can
include the 900 lampposts that Provantage did not contract for. This
might take long if the
current process is anything to go by. The
closing date for the tender in this matter was in May 2018. The
contract with Provantage
was only entered into in January 2021.
Manaung’s lack of alacrity is patent. It can in the meantime
generate an income from
Provantage and the latter can recoup some, if
not all, of its losses. It may decide to wait until the contract
between it and Provantage
has run its course and call for proposals
for all its outdoor advertising sites.
[25]
What weighs heavily in favour of Provantage is the fact that no
complicity with Mangaung was
shown. It is therefore an innocent
party, although it could have investigated whether a proper extension
was granted in terms of
the relevant prescipts. Young was clearly a
guilty party that flaunted most of the rules of the game. To crown it
all, when the
award was made to it, it gave or sold its rights to
another entity. A clear case of fronting.
[26]
We deliberately did not decide the issue of whether Masakhe was
improperly excluded because the
fairness of this process was
seriously undermined by Young and Mangaung. It further seems to us
that the financial part of Masakhe’s
offer was illegible. It
did not include a total bid price. It explained how its bid could
have been understood intelligibly. It
gave a sensible explanation but
the Bid Adjudication Committee wanted a total bid price, which was
not in the bid.
[27]
Provantage carries the onus to prove that it can only satisfy the no
profit no loss principle
by benefiting from the entire period of the
contract. Its projections are flawed. We are constraint to do the
best we can with
the figures given to us. The only way to do that is
to determine a cut off period which we assess to be a period that
would not
leave it, an innocent tenderer, out of pocket. Masakhe may
obviously tender if the Young award and the 900 lampposts are re-run.
We should, however, not prescribe to Mangaung when and how it should
advertise its new request for proposals for outdoor advertising.
[28]
The conditional counter application was unnecessary because
fashioning a just and equitable remedy
must always follow a
declaration of invalidity. Masakhe was substantially successful and
Provantage defended the matter on a limited
basis. We are of the view
that no order as costs should be made.
[29]
I therefore make the following order.
1. The award of the
tender under bid no MMM/BID458:2017/2018 for lamppost advertising,
pavement posters and notices in the Mangaung
municipal area by the
first respondent to the second respondent on or about 13 September
2019, and the consequent Advertising Lease
Agreement that was
concluded between the first respondent and the second respondent on
or about 28 January 2021, is declared invalid.
2. The award of the
tender under bid no MMM/BID458:2017/2018 for lamppost advertising,
pavement posters and notices in the Mangaung
municipal area by the
first respondent to the third respondent on or about 5 June 2019, and
the consequent Advertising Lease Agreement
that was concluded between
the first and the third respondent on or about 31 August 2021, is
declared unlawful and invalid.
3. The invalidity of the
award and the contract in paragraph 1 is suspended for a period of 22
months from the date of this order.
The second respondent shall
continue to perform under the contract in paragraph 1 for 22 months
from the date of this order.
4. The conditional
counter application is dismissed.
5. No order as to costs
is made in the main and conditional counter application.
C.J. MUSI, JP
I
concur.
C. REINDERS, J
Appearances:
For the
Applicant:
Adv. M. J. Engelbrecht
SC
with Adv. A. Pantazis
Instructed by Lovius
Block Attorneys
Bloemfontein
For the 2
nd
Respondent: Adv. A Sawma SC
with Adv. D Watson
Instructed by McIntyre &
Van Der Post
Bloemfontein
[1]
Government Gazette No. 27636 - Vol. 479 - 30May2005,
General Notice 868 of 2005.
[2]
(846/2021)
[2022] ZASCA 82
;
2023 (1) SA 44
(SCA) (3 June 2022).
[3]
At para 13.
[4]
Defensor Electronic Security (Pty) Ltd v Centlec SOC Ltd and Another
[2021] ZAFSHC 315
at para 8.
[5]
Section 6
of the
Promotion of Administrative Justice Act 3 of 2000
reads:
‘
(1)
Any person may institute proceedings in a court or a tribunal for
the judicial review
of an administrative action.
(2)
A court or tribunal has the power to judicially review an
administrative action if-
(a)
the administrator who took it-
(i)
was not authorised to do so by the empowering provision;
(ii)
acted under a delegation of power which was not authorised by the
empowering
provision; or
(iii)
was biased or reasonably suspected of bias;
(b)
a mandatory and material procedure or condition prescribed by an
empowering provision
was not complied with;
(c)
the action was procedurally unfair;
(d)
the action was materially influenced by an error of law;
(e)
the action was taken-
(i)
for a reason not authorised by the empowering provision;
(ii)
for an ulterior purpose or motive;
(iii)
because irrelevant considerations were taken into account or
relevant considerations
were not considered;
(iv)
because of the unauthorised or unwarranted dictates of another
person or body;
(v)
in bad faith; or
(vi)
arbitrarily or capriciously;
(f)
the action itself-
(i)
contravenes a law or is not authorised by the empowering provision;
or
(ii)
is not rationally connected to-
(aa)
the purpose for which it was taken;
(bb)
the purpose of the empowering provision;
(cc)
the information before the administrator; or
(dd)
the reasons given for it by the administrator;
(g)
the action concerned consists of a failure to take a decision;
(h)
the exercise of the power or the performance of the function
authorised by the empowering
provision, in pursuance of which the
administrative action was purportedly taken, is so unreasonable that
no reasonable person
could have so exercised the power or performed
the function; or
(i)
the action is otherwise unconstitutional or unlawful.
(3)
If any person relies on the ground of review referred to in
subsection (2)
(g)
,
he or she may in respect of a failure to take a decision, where-
(a)
(i) an administrator has a duty to take
a decision;
(ii)
there is no law that prescribes a period within which the
administrator is
required to take that decision; and
(iii)
the administrator has failed to take that decision,
institute
proceedings in a court or tribunal for judicial review of the
failure to take the decision on the ground that there
has been
unreasonable delay in taking the decision; or
(b)
(i) an administrator has a duty to take a decision;
(ii)
a law prescribes a period within which the administrator is required
to take
that decision; and
(iii)
the administrator has failed to take that d
ecision
before the expiration of that period,
institute
proceedings in a court or tribunal for judicial review of the
failure to take the decision within that period on the
ground that
the administrator has a duty to take the decision notwithstanding
the expiration of that period.’
[6]
Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121
(CC); 2007 (3) BCLR 300 (CC).
[7]
Ibid at para 29.
[8]
Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board:
Limpopo Province and Others
2008 (2) SA 481
(SCA) paras 22.
[9]
Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others (No 2)
[2014] ZACC 12
;
2014 (4) SA 179
(CC) at para 7.
[10]
Ilex South Africa (Pty) Ltd v National Health Laboratory Service and
Others
2021 (5) SA 587
(GJ).