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[2023] ZAFSHC 503
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Fezi Consultants and Auditors (Pty) Ltd v Centlec (SOC) Ltd and Another (1318/2022) [2023] ZAFSHC 503 (27 December 2023)
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Case Number: 1318/2022
Reportable: YES/NO
Of Interest to other
Judges: YES/NO
Circulate to
Magistrates: YES/NO
In the matter between: -
FEZI
CONSULTANTS & AUDITORS (PTY) LTD
Applicant
And
CENTLEC
(SOC) LTD
1
st
Respondent
MAKOMOTA
INVESTMENT HOLDINGS (PTY) LTD
2
nd
Respondent
CORAM:
MBHELE, AJP
et
DANISO, J
HEARD
ON:
This application was considered on heads of
argument in chambers in terms of
Section 19
(A) of the
Superior
Courts Act 10 of 2013
.
DELIVERED
ON:
27 DECEMBER 2023
[1]
This is an application for leave to appeal against our judgment that
was delivered
on 15 August 2023, in which we made the following
orders:
1.1
The application is dismissed with costs.
1.
2 Costs to include that of counsel.
[2]
The grounds on which leave to appeal is sought are listed extensively
in the application
and to avoid prolixity I shall not repeat same
herein. The costs order made against the applicant is also the
subject of this application.
[3]
Leave to appeal is governed by Section 17 of the Superior Courts Act
10 of 2013 (the Act). Subsection
17(1)(a) – (c) reads as
follows:
(1)
“
Leave
to appeal may only be given where the judge or judges concerned are
of the opinion that-
(a)
(
i) the
appeal would have a reasonable prospect of success; or
(ii) there
is some other compelling reason why the appeal should be heard,
including conflicting judgments on the
matter under consideration;
(b)
the
decision sought on appeal does not fall within the ambit of section
16 (2) (a); and;
(c)
where
the decision sought to be appealed does not dispose of all the issues
in the case, the appeal would lead to a just and prompt
resolution of
the real issues between the parties.”
[4] It
is well established that the existing provisions of the Act raise the
standard to be met by an applicant
in a leave to appeal.
The
test for granting leave to appeal is whether there are any reasonable
prospects of success in an appeal. It is not whether a
litigant has
an arguable case or a mere possibility of success.
[1]
See also
Democratic
Alliance v President of the Republic of South Africa and Others
[2]
where the following was said:
“
The test as now
set out in s17 constitutes a more formidable threshold over which an
applicant must engage than was the case. Previously
the test was
whether there was a reasonable prospect that another court might come
to a different conclusion. See, for example,
Van Heerden v Cronwright
and Others 1985(2) SA 342 (T) at 343 H. The fact that the
Superior
Courts Act now employs
the word ‘would ‘as opposed to
‘might ‘serves to emphasise this point. As the Supreme
Court of Appeal said
in Smith v
S 2012(1)
SACR 567 (SCA) at para 7;
‘
More is
required to be established than that there is a mere possibility of
success, that the case is arguable on appeal or that
the case cannot
be categorised as hopeless. There must in other words be a sound,
rational basis for the conclusion that there
are prospects of success
on appeal.’
[5]
In
The
Mont Chevaux Trust v Tina Goosen and 18 Others
[3]
the court said the following:
"It is clear that
the threshold for granting leave to appeal against a judgment of a
High Court has been raised in the new
Act. The former test whether
leave to appeal should be granted was a reasonable prospect that
another court might come to a different
conclusion, see
Van
Heerden
v Cronwright & Others
1985 (2)
SA 342
(T) at 343H
.
The use of the word "would"
in the said new statute indicates a measure of certainty that another
court will differ from
the court whose judgment is sought to be
appealed against."
[6]
It is clear from the above authorities
that in leave to appeal applications a Judge’s discretion
is
not absolute, it has to be exercised in conformity with section
17(1). The Act places a heavy onus on the applicant to show
why
another court would come to a different conclusion. It must be clear
at the time of granting leave to appeal that prospects
of success on
appeal are real and not fanciful.
[7]
The gravamen of the applicant’s complaint is that it was not
the first respondent’s
case that the applicant’s bid
pricing is predicated on the wrong notion that bidders had to compile
a Fixed Asset Register
from scratch. The applicant submits that the
first respondent’s case was all along that because the
applicant did not quote
a fixed price for Item 4, the Bid Evaluation
Committee could not ascertain the amount that the applicant quoted.
[8]
The respondent’s answering affidavit deals with the scope and
conditions of the bid
as well as the evaluation criteria. It is
apposite to quote the relevant parts of the respondent’s
answering affidavit. The
paragraphs below
[4]
will show that the first respondent indicated that the
applicant was wrong to use the total amounts of the first
respondent’s
estimated assets as the basis for quoting in
items 1 and 2 and in the end import those amounts to item 4 as well:
‘
47.
As a point of departure, it is purposely stated that CENTLEC does
currently have a Fixed Asset Register
with an approximate value of
R6 344 790 101.00
(six billion three hundred and
forty-four million seven hundred and
ninety thousand one hundred and one rand). The total number of assets
are currently estimated
at 1 030 501.00 (one million and
thirty thousand five hundred and one). The aforesaid facts should be
in the applicant’s
knowledge as a partner to a joint venture
who were the insurance brokers of CENTLEC at the time of the bid
submissions. The owner
of FEZI was also a previous member of the
CENTLEC Board.
49.
To reiterate and put it into context the current bid relates to,
inter alia:
49.1. the
performance of a physical verification (and update/include GIS shape
files) of all additions of electricity
infrastructure assets, per the
Entities Fixed Asset Register and updated periodically during the
financial year under review.
49.2. In
addition to the aforesaid to perform a condition assessment of each
item
of electricity
infrastructure assets listed per the Entity’s Fixed Asset
Register.
49.3. To
draft the required adjusting journals to account for changes arising
from the asset related
process (e.g. depreciation, disposals, work in progress).
49.4. And
lastly, to compile a detailed working paper file with sufficient
support for all adjustments made to the Fixed
Asset Register.
55.
What made the exercise even more arduous for the BEC, is that ITEMS 1
and 2 in the Pricing
Schedule refer to additions to the electricity
infrastructure assets and ITEM 4, on the other hand, refers to all
the current assets
of CENTLEC, which includes additions, amongst
others.
56.
For FEZI to simply quote that the once off amount required for ITEM 4
is included in the
price per asset made the calculation near
impossible for the BEC. Especially because no fixed amount of
additional assets was stipulated
in the bid documents. FEZI could
thus not use the total amount of assets (1 030 501) to
quote for ITEMS 1 and 2, and
in the end use those amounts of assets
to quote for ITEM 4 as well.’
[9]
The applicant contends further that there was no provision in the bid
document on how item
4 was to be complied with (recording of all
assets in the Fixed Asset Register of CENTLEC as per current
componentisation) nor
did the first respondent suggest that the
methodology that the applicant intended employing in recording all
assets in the Fixed
Asset Register did not meet the bid.
[10] The
applicant prepared its bid from the premise that it had to do
physical verification of all assets in the Fixed
Asset Register and
thereafter record them in the Fixed Assets Register. It has always
been the respondent’s case that the
successful bidder would
only have to do physical verification of additional items to the
Fixed Asset Register year on year and
that item 4 would be a desktop
exercise where the first respondent had to account for depreciation
per each asset and disposals.
[5]
[11]
A closer look at paragraph 4.2 dealing with
technical
specifications
[6]
supports the first
respondent’s assertion. It is clear that the applicant’s
bid would not have met the requirements
of the tender thus the
applicant’s inability to quote for 3 years successively in
respect of item 4. The applicant’s
bid was totally off the mark
as demonstrated by the first respondent.
[12]
Having considered the merits of the
application for leave to appeal, I am not persuaded that there would
be reasonable prospects
of success on appeal.
The
applicants contend that we erred in granting a costs order against
them and that they ought to have been afforded the protection
of
Biowatch
rule.
[7]
The
Biowatch
principle was articulated as follows:
‘
If
there should be a genuine, non-frivolous challenge to the
constitutionality of a law or of State conduct, it is appropriate
that the State should bear the costs if the challenge is good, but if
it is not, then the losing non-State litigant should be shielded
from
the costs consequences of failure. In this way the responsibility for
ensuring that the law and State conduct are constitutional
is placed
at the correct door.’
[13]
The starting point in constitutional litigation is
that
an unsuccessful private litigant in
proceedings against the State ordinarily ought not to be ordered to
pay costs
. Biowatch has not stripped the
court off its discretion to award costs. Biowatch serves as a
guide for awarding of costs in constitutional litigation. The rule
is
not unqualified. The court in Biowatch further held:
‘
[24] At the
same time, however, the general approach of this Court to costs in
litigation between private parties and the state,
is not
unqualified. If an application is frivolous or vexatious, or in
any other way manifestly inappropriate, the applicant
should not
expect that the worthiness of its cause will immunise it against an
adverse costs award. Nevertheless, for the reasons
given above,
courts should not lightly turn their backs on the general approach of
not awarding costs against an unsuccessful litigant
in proceedings
against the state, where matters of genuine constitutional import
arise. Similarly, particularly powerful reasons
must exist for a
court not to award costs against
the state in favour of a private litigant
who achieves substantial
success in proceedings brought against it.’
[25] Merely labelling
the litigation as constitutional and dragging in specious references
to sections of the Constitution would,
of course, not be enough in
itself to invoke the general rule as referred to in Affordable
Medicines. The issues must be
genuine and substantive, and
truly raise constitutional considerations relevant to the
adjudication. The converse is also true,
namely, that when departing
from the general rule a court should set out reasons that are
carefully articulated and convincing.
This would not only be of
assistance to an appellate court, but would also enable the
party concerned and other potential
litigants to know exactly what
had been done wrongly, and what
should
be avoided in the future.’
[8]
[14]
I
have no doubt that
Biowatch
rule is aimed at protecting litigants who approached court to enforce
a right that is guaranteed in the constitution.
In
Motala
v Master, North Gauteng High Court, Pretoria
[9]
the Supreme Court of Appeal remarked that
Biowatch
principle does not constitute a license to litigate with impunity
against the State. In
Lawyers
for Human Rights v Minister in the Presidency and Others
the
court remarked as follows
:
[10]
‘
[The Biowatch
rule], of course, does not mean risk-free constitutional litigation.
The court, in its discretion, might order costs,
Biowatch said, if
the constitutional grounds of attack are frivolous or vexatious - or
if the litigant has acted from improper
motives or there are other
circumstances that make it in the interests of justice to order
costs. The High Court controls its process.
It does so with a measure
of flexibility. So a court must consider the “character of the
litigation and [the litigant's]
conduct in pursuit of it”, even
where the litigant seeks to assert constitutional rights.’
[15]
The applicant submitted a bid that did not meet the set criteria.
Although the applicant approached court
to enforce a right in terms
of the Promotion of Administrative Justice Act
[11]
which finds its origin in the Constitution,
[12]
there is no genuine constitutional issue raised by the applicant. It
was clear that the applicant misunderstood the set criteria
of the
bid and it, nevertheless, pursued this litigation.
Biowatch
was not aimed at protecting litigants who bring frivolous and
vexatious issues to court. The
Biowatch
protection is available to litigants who are raising genuine
constitutional issues.
[16]
Having concluded that none of the grounds of
appeal enjoy reasonable prospects of success, whether taken
singly or cumulatively,
the application for leave to appeal ought to
fail.
[17]
I make the following order:
Order:
1. The
application for leave to appeal is dismissed with costs.
2.
Costs to include those consequent in the employment of counsel.
NM MBHELE, AJP
I
concur
NS DANISO, J
Appearances:
For the Applicants:
Adv. W A Van Aswegen
Instructed by:
Symington & De Kok
Incorporated
BLOEMFONTEIN
For
the Respondents:
Adv.
D R Thompson
Instructed
by :
Raynard
& Associates
BLOEMFONTEIN
[1]
Mothuloe
Incorporated Attorneys v The Law Society of the Northern Province
2017
JDR 533 (SCA) at para 18.
[2]
(21424/2020) [2020] ZAGPPHC 326(29 July 2020) paras [4] – [5].
[3]
Unreported judgment of the
Land
Claims Court of South Africa Case No LCC 14R/2014 delivered on 3
November 2014.
[4]
Paragraphs
47, 49, 55 and 56 of the founding affidavit.
[5]
‘
Paragraph
59 of the answering affidavit ‘The starting point for item 4
would be the previous year’s Fixed Asset Register.
The
successful bidder has to literally update the said register and make
sure that it is compliant with GRAP standards. This
is the most
important aspect and a time consuming desktop exercise. It not only
deals with additions brought into account, CENTLEC
has to account
for depreciation per each and every asset, disposal, etc. In the end
CENTLEC needs to provide the Auditor General
with an actual GRAP
compliant register.’
4.
Technical
Specifications
4.1.
Develop the verification and condition assessment methodology (using
a sliding scale)
which should be submitted to the Management,
Auditor General and National Treasury for approval.
4.2.
Perform a physical verification (and update / include GIS shape
files) of all additions
of electricity infrastructure assets, per
the entity’s Fixed Asset Register and updated periodically
during financial year
under review.
4.3.
Perform a condition assessment of each item of electricity
infrastructure assets listed
per the entity’s Fixed Asset
Register.
4.4.
The team should be available, after the assignment, to assist in
addressing Audit queries
based on the valuations that they have
performed.
4.5.
Draft the required adjusting journals to account for changes arising
from the asset related
process (e.g. Depreciation, Disposals, Work
in Progress).
4.6.
Compile a detailed working paper file with sufficient support for
all adjustments make
to the Fixed Asset Register.
[7]
Biowatch
Trust v Registrar Genetic Resources and Others
(CCT 80 / 08)
[2009] ZACC 14
; 2009(6) SA 232 (CC).
[8]
Biowatch
Trust v Registrar Genetic Resources and Others
(CCT 80 / 08)
[2009] ZACC 14
; 2009(6) SA 232 (CC).
[9]
Motala
v Master, North Gauteng High Court
[2019]
ZASCA 60
;
2019 (6) SA 68
(SCA) para 98.
[10]
Lawyers
for Human Rights v Minister in the Presidency and Others
[2016]
ZACC 45
;
2017 (1) SA 645
(CC);
2017 (4) BCLR 445
(CC) para 18.
[11]
The
Promotion of Administrative Justice Act 3 of 2000
.
[12]
Constitution of the Republic of South Africa, 1996.