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[2022] ZAKZPHC 65
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Key Truck Durban (Pty) Ltd and Others v Ethekwini Municipality and Others (4855/2021) [2022] ZAKZPHC 65 (31 October 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU
NATAL DIVISION, PIETERMARTIZBURG
CASE
NO. 4855/2021
In
the matter between:
KEY
TRUCK DURBAN (PTY) LTD
FIRST
APPLICANT
(Registration
No: 2019/476713/07)
KEY
TRUCK (NEW GERMANY) (PTY) LTD
SECOND
APPLICANT
(Registration
No: 1982/002144/07)
KEY
TRUCK
&
CAR
(PINETOWN) (PTY) LTD
THIRD APPLICANT
(Registration
No: 1973/008640/07)
KEY
TRUCK
&
CAR
(DURBAN) (PTY) LTD
FOURTH
APPLICANT
(Registration
No: 1981/006105/07)
and
ETHEKWINI
MUNICIPALITY
THE
TENDER APPEAL AUTHORITY:
FIRST
RESPONDENT
ETHEKWINI
MUNICIPALITY
SECOND
RESPONDENT
ISIPHO
CAPITAL MOTORS (PTY) LTD
tla
BATES
MOTORS
THIRD
RESPONDENT
This
judgment was handed electronically by transmission to the parties'
representatives by email. The date and time for hand down
is deemed
to be handed down on 31 October 2022.
ORDER
(1)
The decision of the first respondent to
reject the applicants' tender bids for Tender No. CF/93/19 is hereby
reviewed and set aside.
(2)
The decision of the second respondent to
uphold the first respondent's
rejection
of the applicants' tender bids for Tender
No. CF/93/19 is hereby reviewed and set
aside.
(3)
The award of Tender No. CF/93/19 to the
third respondent as sole preferred bidder is hereby reviewed and set
aside.
(4)
The tender process in respect of Tender
No. CF/93/19 is remitted back to the first respondent's Bid
Evaluation Committee for re-evaluation.
(5)
The applicants are directed to pay the
wasted costs of the application on 23 July 2021.
(6)
The first respondent is directed to pay
the wasted costs occasioned by the adjournment on 28 October 2021.
(7)
The first respondent is ordered to pay
the costs of the application for Part B of the notice of motion, such
costs to include those
consequent upon the employment of two counsel
where so employed.
JUDGMENT
Delivered
on 31 October 2022
Balton
J
[1]
The applicants have brought a review
application regarding the decision of the first respondent and/or the
second respondent to
exclude the applicant's bids for tender
CF/93/19.
[2]
This
application
commenced
as an urgent application by the applicants on 23 July 2021 for
relief
in
terms
of
Parts
A
and
B
of
the
notice
of
motion.
Pursuant
to
an
undertaking by the first respondent not to implement the award of the
tender, the interdictory relief sought in Part A of the
notice of
motion was withdrawn by consent between the parties.
[1]
Accordingly,
the applicants seek an order in terms of Part B of the notice of
motion. On 28 October 2021 due to the first respondent's
failure
to file its heads of argument and condonation application in
compliance with Practice Directive 9.4., the matter was adjourned
to
16 March 2022 and costs were reserved.
[3]
The applicants are independently
operated corporate entities and form
part of the Key Motor Group (Pty) Ltd, which company owns a majority
shareholding
in
each of the applicants.
The
Key Motor Group (Pty) Ltd is a subsidiary of Key Holdings (Pty) Ltd.
The first and second applicants compete
in the truck industry and the third and fourth applicants compete in
the light commercial
and passenger vehicle industry.
The applicants are registered on the
first respondent's supplier database.
[4]
The first respondent is the Ethekwini
Municipality
(the
'Municipality').
[5]
The second respondent is the Tender
Appeal Authority: Ethekwini Municipality established in terms of the
Ethekwini Municipality
Supply Chain Management Policy, 2017.
[6]
The third respondent also tendered
for the bids and was
awarded the tenders.
Factual
Background
[7]
The background
facts to this dispute are the following:
(a)
During February 2020, the Municipality
advertised Tender No. CF93/19: 'Supply and delivery of Opel,
Chevrolet and Isuzu spares,
provisions of services and repairs to
vehicles as and when required for a period of thirty six months'.
(b)
Three different categories
of bids were called for, namely:
(i)
Category A for the supply and delivery
of spares.
(ii)
Category B for the provision of service,
maintenance and repairs to passenger and light commercial vehicles
below and equal to 1
ton.
(iii)
Category C for the provision of service,
maintenance and repairs to heavy commercial vehicles equal to 1.1 ton
and above.
(c)
The applicants are registered on the
Municipality's database, and the second, third and fourth applicants
were awarded contracts
through the
Municipal Supply Chain Management
Regulations
on
contracts similar to Tender No. CF 93/19 during December 2018 to
January 2021.
(d)
The applicants
submitted four separate bids as follows:
(i)
The first and second applicants
submitted tender bids in respect of categories A and C;
(ii)
The third and fourth applicants
submitted tender bids in respect of categories A and B.
(e)
A
report by the Ethekwini Municipality, City Fleet Division ('City
Fleet') to the Municipality's Bid Evaluation Committee ('the
BEC')
dated 21 August 2020 recommended that the applicants and the third
respondent all be approved as successful bidders for tender
CF/93/19.
[2]
(f)
At
a meeting of the BEC on 10 November 2020, the recommendations were
deferred, and a request addressed to the City Fleet Division
that an
addendum report be prepared excluding the applicants' bids on the
basis that 'they colluded'.
[3]
(g)
The
addendum
report
prepared
by
City Fleet
[4]
indicates
that
the applicants
were
excluded due to anti-competitive behaviour.
[5]
The
report states
inter
alia:
'The
purpose of this report is to exclude bidders from the Key Motor Group
in the recommendation and proceed with lsipho Capital
Motors (Pty)
Ltd, t/a Bates Motors.'
(h)
On
1 December 2020, the BEC approved the award of the tender to the
third respondent.
[6]
(i)
The
Municipality's Bid Adjudication
Committee
(the 'BAC') approved the BEC's recommendation on 18 January 2021.
[7]
(j)
On 21 April
2021,
the
applicants
were
notified
that their bids were unsuccessful and that the third respondent
was
the sole successful bidder.
[8]
(k)
The
applicants
lodged
an
internal
appeal
in
terms
of
Regulation
49
of
the Municipality
Supply Chain Management
Policy (the 'SCM') on 3 May 2021.
This appeal was referred to the second
respondent for decision.
[8]
The Municipality's procurement documents
for the tender consists of ten sections,
which include: Conditions of Tender
(Section 2)
, Special Conditions of Tender ('SCT') and Additional
Conditions of Tender ('ACT')
(Section 3)
and Returnable Tender
Documents
(Section 4).
[9]
The following returnable documents had
to be included in prospective bidders' bid submissions:
(a)
a MBD 9: Certificate
of Independent Bid Determination
('the MBD 9 Certificate');
(b)
a MBD 4: Declaration of Interest; and
(c)
a MBD 6.1: B-BBEE Status Level
Verification
Certificate.
[10]
Section H of the Tender Procurement Document which deals with the MBD
9 Certificate, reads inter
alia as follows:
[9]
The
following MBD serves as a certificate of declaration that would be
used by institutions to ensure that, when bids are considered,
reasonable steps are taken to prevent any form of bid-rigging.
In
order
to
give effect
to the above, the following
Certificate
of
Bid
Determination
must
be
completed and submitted with the bid.
The undersigned, in submitting the
accompanying bid, in response to the invitation for the bid do hereby
make the following statements
that I certify to be true and complete
in every respect:
1.0
I
have
read and
I
understand
the contents of this Certificate;
2.0
I
understand
that the accompanying bid will be disqualified if this Certificate is
found not to be true and complete in every respect;
3.0
I
am
authorized by the bidder to sign this Certificate, and to submit the
accompanying
bid,
on behalf of the bidder;
4.0
Each person whose signature appears on
the accompanying bid has been authorised by the
bidder to determine the terms of, and to
sign, the bid, on behalf of the bidder;
5.0
For the purposes of this Certificate and
the accompanying
bid,
I understand that the word
"competitor"
shall include any individual or
organization, other than the bidder, whether or not
affiliated
with the bidder, who:
•
has
been requested
to
submit a bid in response to this bid invitation;
•
could
potentially submit a bid in response to this bid invitation, based on
their qualifications, abilities or experience;
•
provides
the same goods and services as the bidder and/or is in the same line
of business as the bidder.
6.0
The bidder has arrived at the
accompanying bid independently
from, and without consultation,
communication, agreement or
arrangement
with
any competitor.
...
7.0
In particular, without limiting the
generality of paragraphs 6 above, there has been
no
consultation, communication, agreement or arrangement with any
competitor regarding:
•
prices;
•
geographical
area where product or service will be
rendered (market allocation);
•
methods,
factors
or
formulas
used
to
calculate
prices;
•
the
intention or decision to submit or not to submit, a bid;
•
the
submission
of
a
bid
which
does not
meet
the
specifications
and
conditions
of
the
bid;
•
bidding
with the intention not to win the bid.
8.0
In
addition,
there
have
been
no
consultations,
communications,
agreements
or arrangements with any competitor
regarding the quality, quantity, specifications and conditions or
delivery particulars of the
products or services to which this bid
invitation relates.
9.0
The terms of the accompanying bid have
not been, and will not be, disclosed by the bidder, directly or
indirectly, to any competitor,
prior to the date and time of the
official bid opening or of the awarding of the contract.'
[11]
Section I of
Section 4(d)
of the Tender
Procurement Document, which deals with the Confirmations,
Authorities, Certifications,
Acknowledgements
and
Signatures,
states
inter
alia
the following:
'That
the undersigned, who warrants that he/she is duly authorised to do so
on behalf of the enterprise:
4.0
Confirms that I/we are not associated, linked or involved with any
other tendering entities submitting tender offers and have
no other
relationship with any of the bidders or those responsible for
compiling the scope of work that could cause or be interpreted
as a
conflict of interest.'
[10]
Issues
[12]
The applicants raised two preliminary
issues in their replying affidavit, namely that in
the opposing
affidavit,
the Municipality
attempted
to
rely
on firstly,
facts
not
placed before the second respondent
and secondly, on the restrictive
practices as defined in the Competition Act 89 of 1998 ('the
Competition Act').
>
[13]
The main issues in dispute are whether:
(a)
The
impugned
decision
to
reject
the
applicants'
tender
bids
for
Tender
number CF/93/19 ought to be set aside.
(b)
The third respondent's bid was
non-compliant
with
the conditions of tender.
Preliminary
Issues
[14]
The applicants contend that the
additional facts on which the Municipality
seeks to show that the applicants
colluded (or did not act independently) are on the basis that two
individuals allegedly initiated
each page of the applicants' bids and
MJ van Niekerk of Isuzu Motors South Africa (Pty) Ltd signed a letter
on 24
March
2020 confirming that
'the Applicants
are duly
authorised
by
Isuzu'.
[15]
The applicants submit that these
additional facts lack merit as the signatures appearing on the
applicants' bid documents are those
of the deponents thereto and the
commissioner of oaths. Further, the letters issued by Isuzu to each
individual applicant are not
evidence of collusion as these letters
were returnable documents, which the applicants were obliged to
include in the tender submissions.
[16]
The
Municipality denies that it has placed new evidence before this
court, and contends that the points raised by the applicants
in the
preliminary
issues
were contained in the tender
documents
that form part of the tender bids submitted
by
the applicants. This
information
was
before
the
SEC
when
it
made
its
recommendation
and
the
BAC
when it approved the submissive tender. Further, the tender documents
of all bidders were before the second
respondent
when it made its Ruling.
[11]
[17]
In my view the second respondent's
Ruling indicates that the issues raised by the applicants in their
first preliminary point were
indeed considered by the second
respondent
and
are not new facts arising in the municipality's opposing affidavit.
Competition
Act
[18
]
The applicants contend that the second
respondent's reliance on the restrictive practices as defined in the
Competition Act is
misplaced as such disputes fall within the
exclusive jurisdiction of the
Competition Act.
In
terms of
s 65
of the
Competition Act, any
disputed tender will remain valid until declared void by either the
Competition Tribunal or the Competition Appeal Court.
The tender itself caters for the
referral of suspicious bids to the Competition Commission for further
investigation.
[19]
The Municipality submits that the
Competition Act is
one of the empowering provisions referred to in
the MBD 9 and the Municipality's reliance on it is limited to its
reference on
the MBD 9 document. It is a statutory provision that
must be considered when making a determination on collusive bidding.
The Municipality
has not made any allegations to the effect that the
tenders are void as stipulated in the applicants' replying affidavit.
[20]
In my view, the second respondents
Ruling does not indicate that the Municipality or
the second
respondent
relied
on
the
restrictive
provisions
of
the
Competition
Act
or
that any action has been taken in terms of the
Competition Act.
[21
]
Accordingly, the preliminary issues
raised by the applicants are without merit and are dismissed.
Main
Issues
[22]
The first issue to consider is whether
the impugned decision rejecting the applicants' bids for Tender
number CF/93/19 ought to
be set aside.
In this regard, I will firstly consider
the decision of the Municipality to disqualify the applicants' bids
and secondly, the decision
of the second respondent.
The
decision of the Municipality to disqualify the applicant's bid
[23]
The applicants submit that:
(a)
The BEC did not give reasons for its
decision that the applicants' bids had to be excluded because they
had colluded.
(b)
There is no evidence that the applicants
conspired with each other to raise prices or lower the quality of
goods and/or services
or that there was any agreement between the
applicants
not
to compete.
(c)
The first and second applicants competed
with each other and the third and fourth applicants competed with
each other.
(d)
The finding of the BEC that the
applicants colluded falls to be set aside in terms of s 6(2)(d) of
the Promotion of Administrative
Justice Act 3 of 2000 ('PAJA'), in
that the finding was materially influenced by an error of law, namely
the incorrect interpretation
of what constituted 'collusive bidding'
for the purposes of section 4 of the Tender Procurement Document.
[24]
The Municipality
submits that:
(a)
The applicants failed to take cognizance
of the entire tender document, in particular the importance of the
MBD 9. The purpose of
the MBD 9 certificate and the declaration is to
prohibit and prevent collusive bidding within the meaning of the
Competition Act and
to prevent other forms of abuse in the wide sense
in terms of the Municipality's Supply Chain Management ('the SCM')
policy.
(b)
The
MBD 9 refers to
s 4(1)(b)(iii)
of the
Competition Act which
states
that 'collusive bidding is
a
per se prohibition
meaning
that it cannot be justified under
any
grounds'.
[12]
(c)
It follows that the MBD 9 was
instructive, and the sanction was disqualification if the bidder fell
foul of its provisions.
(d)
The applicants' tender bids violate
several of the peremptory provisions contained in the MBD 9
declaration, read with
s 4(b)(iii)
and regulation 38(1) of the
Municipal Supply Regulation;
a
certificate of declaration whose primary purpose is to ensure the
prevention and prohibition of collusive bidding.
(e)
The applicants
have
not
complied
with
the peremptory
requirements
of the MBD 9, read with the statutory
requirement
of
section 4(b)(iii)
of the
Competition Act.
They
have not arrived at the
accompanying bids independent from, and without consultation,
communication, agreement or arrangement
with each other.
(f)
It cannot be accepted that there has
been no consultation, communication, agreement or arrangement
with each other relating to prices,
geographical
area
where the product or service will be rendered, methods, factors or
formulas used to calculate prices and/or the intention or
decision to
submit or not submit a bid.
(g)
The Municipality was correct in its
finding that the applicants' ought to be excluded from the
procurement
process
on the basis that they colluded.
(h)
It is common cause that the each
applicant signed the declaration contained in the MBD 9 and in doing
so, the applicants' confirmed
that they are not associated, linked or
involved with any other tendering entities submitting tender offers
and have no other relationship
with any of the bidders or those
responsible for compiling the scope of work that could cause or be
interpreted as a conflict of
interest and they accept that, in
addition to cancellation of a contract, action may be taken against
them should the declarations
prove to be false.
Evaluation
[25]
The Municipality's main contention
is that the applicants
have breached
the MBD 9 Certificate in that the
certificates were found to be not true and that the bid documents
were not independently completed.
The
purpose of the certificate of declaration is to prevent collusive
bidding.
[26]
In
terms of the SCT 14,
the
evaluation
process
consists of
a
two-step
process.
[13]
Step one which is
set
out in SCT 14, and ACT4 of the Additional Conditions of Tender
('ACT4'), prohibited the applicants and other companies with
similar
corporate structures from submitting bids for the tender. The fifth
bullet point of SCT 14 read as follows:
'Bidders
in the same group of companies, in horizontal relationships or within
the same directorship are barred from competing against
each other
for this tender enquiry as their tender responses will be
automatically disqualified and classified as collusive behaviour
submissions. Submissions will only be considered if the parties
submit one bid response for the group with a listing of branches
the
group intends to deploy for the supply of goods and provision of
services or from one nominated entity within the group that
will
respond to the tender enquiry.'
[27]
ACT4
had
a
similar
provision
with
the
following
heading
'PROHIBITION
OF
TENDER
RESPONSES FROM COMPANIES IN THE SAME GROUP'
.
[14]
[28]
On
19
March
2020,
the
Municipality
invited
prospective
bidders
to
attend
a
compulsory clarification meeting.
[15]
It
issued an amended notice by deleting the wording of the fifth bullet
point in SCT 14 and it also amended the similar provision
in ACT4
which echoed the above fifth bullet point in the SCT 14 except that
instead of the word "Bidders" in SCT 14 the
word
"Companies" in ACT4 was used.
[29]
In terms of the amendment, ACT4 reads as
follows:
'ACT
4
PROHIBIT/ON OF COLLUSIVE BIDDING
Collusive
bidding is prohibited'
[30]
The Municipality amended the
requirements for the tender bids by deleting the requirements that
bidders in the same group of companies
in horizontal relationships or
within the same directorship could not compete against each other.
This accordingly meant that either the
first or second applicants could bid against the third or fourth
applicants.
The
first and second applicants were in the trucking industry, and they
could not bid against each other, likewise the third and
fourth
applicants were in the light motor vehicle industry and could not bid
against each other.
[31]
As
previously
referenced
earlier
in
this
judgment,
section
H
of
the
Tender
Procurement
Document
which deals with the MBD 9 Certificate, reads as follows:
[16]
'
Section
4(1)(b)(iii)
of
the
Competition Act 89 of
1998
,
as amended,
prohibits
an agreement between, or concerted practice by, firms, or a decision
by an associations of firms, if it is between parties
in
a
horizontal relationship and if it involves collusive bidding (or bid
rigging).
Collusive bidding is a
per
se
prohibition (sic) meaning that it
cannot be justified under any grounds. Municipal Supply Regulation 38
(1) prescribes that a supply
chain management policy must provide
measures for the combating of abuse of the supply chain management
system, and must enable the accounting
officer, among others, to:
(a)
take all reasonable steps to prevent
such abuse;
(b)
reject the bid of any bidder if that
bidder or any of its directors has abused the supply chain management
system of the municipality
or municipal entity or has committed any
improper conduct in relation to such system; and
(c)
cancel a contract awarded to
a
person
if the person committed any corrupt
or
fraudulent
act
during the bidding process or the execution of the contract.
[32]
The
Tender Procurement Document defines bid rigging as:
[17]
'Bid
rigging (or collusive bidding) occurs when businesses, that would
otherwise be expected to compete, secretly conspired to raise
prices
or lower the quality of goods and/or services for purchasers who wish
to acquire goods and/or services through a bidding
process. Bid
rigging is, therefore, an agreement between competitors not to
compete.'
[33]
In
Tourvest
Holdings
(Pty) Limited
v
Airports
Company
of
South
Africa
Limited
2014
JDR 0851 (GP), the court held that:
'In
Competition Commission v Aveng (Africa) Limited,
the
Competition Tribunal described collusive tendering as conduct which
resulted in the "tender process being distorted".
It went
to say:
Collusive
tendering therefore applies to agreements or concerted practices
which have as their object or effect the prevention,
lessening,
restriction and distortion of competition in South Africa.'
[34]
The Competition Commission webpage
defines collusive tendering as follows: 'Collusive tendering,
commonly
called "bid rigging". is
an agreement
amongst
competitors
not to compete on the bids they
submit
after being invited to tender. For these
purposes, firms
will
be regarded as competitors if they are
in the same line of business.'
Together
with price fixing and market allocation, collusive tendering falls
within the class of conduct referred to as "cartel
activity".
Collusive
tendering may take many forms, for example:
-
complementary
bidding: firms may agree on their bids
in advance by deciding that one of them will submit the lowest bid or
will submit the only
bid containing
acceptable terms;
-
bid suppression:
in this form, some firms may agree to
refrain from bidding;
-
bid rotation: firms may decide to bid
high so that a predetermined
bidder
will win.
Supply
chain
management
practitioners
should
note
that
collusive
tendering
is
often
accompanied by an agreement to cede
portions of a tender to the losing bidder should the tenders not be
awarded as had been aoreed
uoon by the firms involved.
All
forms
of
collusive
tendering
are prohibited by section 4(1)(b)(iii)
of the
Act,
which states that:
"An
agreement between, or concerted practice by firms or
a
decision by an association of firms
is prohibited if it is between parties in a horizontal relationship
and if it involves collusive
tendering."
[35]
Collusion is defined in Wikipedia as:
'[A]
deceitful agreement or secret cooperation between two or more parties
to limit open competition by deceiving, misleading or
defrauding
others of their legal right.'
[36]
Considering the above definitions of
collusive tendering, there is no evidence on the papers that the
applicants engaged in bid
rigging or collusion.
The definition of collusion is strict
and in any event the Municipality allowed the applicants to compete
against each other when
it amended the SCT14. Accordingly, the BEC's
decision that the applicants colluded is unsubstantiated and is
accordingly wrong
and ought to be set aside.
The
Decision of the Second Respondent
[37]
The second respondent found that there
were similarities in the applicants' bids, which proved that same
were not independently
prepared. The Ruling dated 18 June 2021 reads
inter-alia that:
'4.41
An acceptable bid meant a bid that complied with the bid
requirements, in this case, the returnable schedules, specifically
MBD 9.
4.42
decision whether or not to exclude a
non-compliant bidder from a bid process depend on a variety of
factors, among others, the wording
of the tender document, the
materiality of the unfulfilled requirements, the degree of
non-compliance and the purpose of the requirement.
4.43
MBD 9 was instructive in
that bids would be disqualified if the
certificate was found not to be
true
and complete in
every
respect.
4.44
On
a conspectus of the above facts, it appears the appellants bids were
not acceptable in that they were not independently prepared
as
required by MBD 9.
The
respondent, based on
MBD
9,
disqualified the appellants bids non-competitive behaviour.'
[18]
[38]
The applicants contend that the second
respondent did not confirm
the
finding
of
the BEC that the applicants had been guilty of collusive bidding.
It found instead that the applicants had
been guilty of breaching the MBD 9 Certificate.
[39]
The Ruling reads inter alia that:
'4.39.1
In the Bid Documents of the 3rd Appellant and 4th Appellant, there
are letters of engagement dated 12 May 2020 attached,
among others,
stating that
"this letter serves to confirm that the Key
Group of Companies has engaged the services of BEE Compliancy for
B-BBEE Consulting''
to provide BBBEE certificates for the 2nd,
3rd and 4th Appellants;'
[40]
The applicants contend that they all
used the same verification agency to issue the B-BBEE certificates.
I agree with the applicant that this
does not indicate that their respective bids were not independently
prepared.
[41]
The Ruling further reads inter alia
that:
'4.39.2
A letter dated 18 May 2020 to the Respondent, signed by Justin Lewis,
who also happen to be director (sic) of the 3rd Appellant
formed part
of the bids of the 2nd Appellant and 3rd Appellant;'
[42]
The applicants contend that this finding
was factually incorrect. The Municipality does not dispute this error
as it admits in paragraph
44 of its answering affidavit that only the
third applicant's bid contained a letter from Mr. Lewis.
[43]
The Ruling reads inter alia that:
'4.39.3
PJ Emanuel appears as signatory to Resolutions of Directors dated on
the same day, 20 May 2020, for 1st Appellant and 4th
Appellant;'
4.39.4
In addition, the same PJ Emanuel
appears as a signatory to Resolution of
Directors dated 19 May 2020 and 20 May 2020 for 2nd
Appellant and 3rd
Appellant respectively;'
[44]
The applicants submit that Mr Emmanuel
is the Chairman of the Board of Directors and was obliged to sign all
the resolutions and
was but one of the signatories to each of the
resolutions. Furthermore, the applicants' respective decisions to
submit bids was
in each instance taken by that applicant at its board
level.
[45]
The Municipality submits that the
applicants' tender documents reveal that Mr Emmanuel is the signatory
to the section 4: Authority
of Signatory document on all four bids
authorising different managing directors to submit the bids on behalf
of each applicant.
Mr
Emmanuel
similarly
signed all
the resolutions
in all
four
tender documents.
The fact that Mr Emmanuel is the common
director in all four applicants and signed all four applicants'
resolutions, he cannot escape
scrutiny and the conclusion that he was
aware of what was contained in each bid.
[46]
The Ruling reads inter alia that:
4.39.5
The
bid documents of the 1st
Appellant
and 4th
Appellant
were completed with similar handwriting indicating that they were
completed by the same person. In addition, the two bids,
that is, 1
st
and 4
th
Appellants make reference to the same contact email address
mathew.rust@keygroup.co.za
'
[19]
[47]
The applicants submit that Mr Matthew
Rust, a chartered accountant who had the requisite skill and
expertise to complete and collate
the contended documents, was
instructed by both the first and fourth applicants to complete their
biqs. However, the first and
fourth applicants did not submit
competing bids.
They
bid for different portions of the contract.
Therefore, the fact that Mr Rust might
have completed their documents, does not show a breach of the MBD 9
Certificate.
[48]
The Municipality submits that the bids
from the first and the fourth applicants appears to have been
completed by the same person.
The
applicants' have advised that the first and fourth respondents are
not competitors. There are two common signatories which have
been
used to initial each page of all four tender documents.
The applicants contend that the
signature the Municipality
is
referring to is that of their commissioner
of oaths Mr Gareth John
Meyrick
Randles
(the initial
with GR).
Assuming this explanation is
acceptable, firstly, it
still shows that all the tender
documents were commissioned
by
the same individual, despite the fact that all four applicants are
spread out in: New Germany, Pinetown and Durban.
This indicates that the applicants'
worked in concert in concluding their tender bids.
Secondly, there is no explanation for
the second initial that appears in all the tender documents.
It is submitted that the person who
initialed the documents, is someone
who
has authority to sign on behalf
of
the applicants' and as such, someone who has had sight of all four
tender bids prior to the date and time of the official bid
opening or
of the awarding of the contract.
Evaluation
[49]
The Municipality submits that the letter from Mr Van Niekerk from
Isuzu dated 24 March 2020,
confirming that
the
applicants are duly authorised by Isuzu appears in all
the
tender documents.
The
Municipality has suggested that this shows that the request was made
in concert.
The
applicants deny this allegation
[20]
and
admit that Mr MJ Van Niekerk from Isuzu signed the letter in respect
of all four applications and contend that they have no
control over
which
employee of Isuzu is
tasked
with issuing the certification
letters.
The applicant's contention in this regard cannot be faulted.
[50]
The applicants submit that the second
respondent's conclusions drawn from the facts set out in paragraph
4.39 of its Ruling either
individually or collectively do not support
a finding that there has been a breach of the MBD 9 Certificate.
Accordingly, the decision of the second
respondent based on these grounds falls to be set aside in terms of
sections 6(2)(e)(iii),
6(2)(f)(ii)(dd)
and/or 6(2)(h) of PAJA.
[51]
The
Municipality
has
conceded
that
one
of the points
raised
in
the Ruling, namely
that
Mr Lewis was the signatory
to
all the bids was incorrect
and
that he only signed the
bid
in respect
of
the third applicant.
I
am accordingly
satisfied that it
does not appear
as if all the relevant information was
placed before the second respondent, in particular the information
relating to Mr Lewis.
The
decision of the second respondent accordingly falls to be set aside.
[52]
While
bid
rigging
or
collusive
bidding
was
not
an
issue
before
the
second respondent, it is important to
note that the decision of the second respondent
refers to non-compliance with the MBD 9
and the
Competition Act, which
takes into account collusive bidding
or bid rigging.
The
second respondent did not make a decision on bid rigging, the
Municipality did so.
[53]
It is noted that the respondent was at
all times aware of the relationship between the applicants
and
that
the
first
and
fourth
applicants
have
previously
been
awarded tenders by the Municipality.
There is no evidence on the papers that the applicants engaged in bid
rigging.
I
am satisfied that the applicants have provided an acceptable
explanation to the points raised by the second respondent.
[54]
I am accordingly satisfied that the
decision of the Municipality and the second respondent should be set
aside and that the matter
should be referred back to the Municipality
for reconsideration.
The
applicants should be given an opportunity to be heard by the
Municipality to explain their bids and the Municipality's
concerns.
[55]
The applicants seek that the tender be
remitted to the Municipality for re evaluation, with the
directive that it may not reject
same on the basis of collusion,
collusive bidding, anti-competitive behaviour or a lack of
independence.
I
do not deem it necessary to issue any directive as the Municipality's
guidelines on what an acceptable tender in the circumstances
of the
tenders in this case is clear.
It
is indeed the interpretation and the lack of evidence that does not
support the Municipality's version in this case.
[56]
There is accordingly
no need to deal with the second issue
raised by the applicants in respect of the third respondent's bid.
Costs
[57]
Mr
Pammenter
conceded that the applicants are
responsible for the costs of 23 July 2021 and Ms
Mtati
conceded that the Municipality is
responsible for the costs of 28 October 2021.
Order
[60]
I accordingly make the following order:
(1)
The decision of the first respondent to
reject the applicants' tender bids for Tender No. CF/93/19 is hereby
reviewed and set aside.
(2)
The decision of the second respondent to
uphold the first respondent's rejection of the applicants'
tender bids for Tender No. CF/93/19 is
hereby reviewed and set aside.
(3)
The award of Tender No.
CF/93/19 to
the third respondent as sole preferred
bidder is hereby reviewed and set aside.
(4)
The tender process in respect of Tender
No. CF/93/19 is remitted back to the first respondent's Bid
Evaluation Committee for re-evaluation.
(5)
The applicants are directed to pay the
wasted costs of the application on 23 July 2021.
(6)
The first respondent is directed to pay
the wasted costs occasioned by the adjournment on 28 October 2021.
(7)
The first respondent is ordered to pay
the costs of the application for Part B of the notice of motion, such
costs to include those
consequent upon the employment of two counsel
where so employed.
BALTON
J
Date
of Hearing: 16
March 2022
Date
of Judgment: 31
October 2022
For
the applicant: CJ
Pammenter SC I Adv. Pretorius
Instructed
by: Shepstone
& Wylie Attorneys
Tel
No. 031-575 7000
Email:
afd@wylie.co.za
Ref:
AF Donnelly/nm/
C/o
Shepstone &
Wylie Attorneys
Tel
No. 033-355 1797
Email:
jmanuel@wylie.co.za
Ref:
JTM/mm/
For
the first respondent: Adv.
Mtati
Instructed
by: Luthuli
Sithole Attorneys
Tel
No. (031) 312 2327
Email:
siphesihle@luthulisithole.co.za
Wk44@austensmith.co.za
Ref:
E00658/SM/NM
For
the third respondent: KL
McIntosh SC
Instructed
by:
Poswa
Incorporated
Tel
No. (011) 783 8877
Email:
Nudmiso.dyantyi@poswainc.co.za
Ref:
Mr. Dyantyi/MAT27316
Email:
mpendulo@luthulisithole.co.za
mzwandile.khahula@poswainc.co.za
Mandisa.Nzimande@wylie.co.za
mmthembu@wylie.co.za
[1]
Page 515 of the indexed papers.
[2]
Page 483 to page 508 of the record.
[3]
Page 520 of the record.
[4]
Page 522 - 529 of the record.
[5]
Page 524 of the record.
[6]
Para 8, page 531 of the record.
[7]
Page 548 of the record.
[8]
Pages 444 - 448 of the indexed papers.
[9]
Pages 7-78 of the indexed papers.
[10]
Page 78 of the indexed papers.
[11]
Pages 601 - 625, Volume 7 of the record.
[12]
National Asphalt (Pty) Ltd v Ethekwini Municipality and Others -
unreported judgment of Topping AJ - dated 12 August 2019 at
paragraph 21-23.
[13]
Para
29, Page 16
of the indexed papers.
[14]
Page 52 of the indexed papers.
[15]
First respondent's answering affidavit, para 13, page 616 of the
indexed papers.
[16]
Page 77-78 of the indexed papers.
[17]
Page 73, para 4 of the indexed papers.
[18]
Page 622, Volume 6 of the indexed papers.
[19]
Volume 6, pages 621-622 of the indexed papers.
[20]
Applicants' replying affidavit - para 18, page 598 of the indexed
papers.