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2022
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[2022] ZALMPPHC 18
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Baatshuma (Pty) Ltd v Tubatse Local Municipality and Others (3007/2021) [2022] ZALMPPHC 18 (18 March 2022)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
CASE
NO: 3007/2021
REPORTABLE:
YES
/NO
OF
INTEREST OF THE OTHER JUDGES: YES/
NO
REVISED
DATE:
18/3/2022
IN
THE MATTER BETWEEN:-
BAATSHUMA
(PTY) LTD
APPLICANT
AND
TUBATSE
LOCAL MUNICIPALITY
FIRST
RESPONDENT
REVENUE
ENHANCEMENT AGENCY (PTY) LTD
SECOND
RESPONDENT
MORKALIO
AND HLAHLETETA TRADING
THIRD
RESPONDENT
LEGOTO
IT AND PROJECTS
FOURTH
RESPONDENT
JUDGMENT
MANGENA
AJ
[1]
Fetakgomo Tubatse Local Municipality (“the municipality”)
is an organ of State as
defined in Section 239 of the Constitution
Act 108 of 1996. It is enjoined to comply with Section 217 of the
Constitution in the
procurement of goods and services and ensure that
the process is fair, competitive and transparent.
[2]
On or about 28 August 2020, the municipality issued a tender inviting
interested bidders to apply
for appointment as service providers to
implement revenue enhancement projects for a period of 36
(thirty-six) months. The closing
date for the submission of the bid
documents was 28 September 2020 at 12h00.
[3]
Bidders’ attention was drawn to a “very important notice
on disqualification”
which stated that “a bid not
complying with the peremptory requirements stated hereunder will be
regarded as not being an
“Acceptable bid” and as such
will be rejected!! The requirements listed were as follows:-
●
“
Compliant tax
status (the Municipality will verify tax compliance during evaluation
and adjudication stage).
●
Joint venture
agreement, signed by both parties stipulating the percentage of
shareholding agreement.
●
The bidders must
submit both manual and electronic tender document in the form of CD
or USB for consideration.
●
Submission of
municipal rates and taxes or municipal service invoice issued to the
bidder and all directors, by any other Municipality
or municipal
entity. The rates and taxes charges must not be in arrears for more
than 3 (three) months for the company and directors.
If you are
renting, attach valid signed lease agreement.
●
Fully signed and
completed MBD forms.
●
Certified ID copies of
all directors/members/shareholders of the company/business (for all
companies in case of a joint venture).
●
All pages signed or
initialled.
●
Authority of
signatory, signed by all the parties (a letter showing who is
authorised to sign the documents).
●
Price amendment
without signature will amount to disqualification.
●
Provide central
supplier database (CSD) number”.
[4]
The municipality received bids from several companies and in due
course evaluated them for compliance
with the administrative
requirements and functionality. Baatshuma (Pty) Ltd, was eliminated
for non-compliance with peremptory
requirements on the basis that not
all pages were signed and initialed. The tender was awarded to the
second respondent, Revenue
Enhancement Agency (Pty) Ltd with
Registration Number 2018/633/38/07 on 15 December 2020.
[5]
Dissatisfied with the outcome of the evaluation and adjudication
process, applicant instituted these review
proceedings on 03 May 2021
for an order amongst others, declaring the award of the tender by the
first respondent (municipality)
to the second respondent invalid,
declare the contracts concluded between the municipality and the
second respondent pursuant to
the award of the tender void
ab
initio
; condonation for the late filing of the review and the
extension of the 90 days period referred to in Section 5(1) of PAJA
in so
far as it may be necessary and costs of suits. The municipality
was further required to file the record in terms of Rule 53 of the
Uniform Rules of Court.
[6]
The municipality has filed the record and is opposing the
application, largely on the basis that
the Applicant has
misrepresented facts and allegedly committed fraud regarding its BEE
certificate. It is contended that the Applicant
is unsuited to
institute these proceedings because “his hands are not clean”.
On this basis, it was argued that it
has no standing to approach this
court and have the tender reviewed and set aside.
[7]
The contention by the municipality is
untenable. The right of a party to institute court
proceedings has
got nothing to do with BEE or tax compliant status more especially in
public procurement matters. Tax and BEE status
are relevant for
adjudication purposes and allocation of points and remain subject of
dispute until determined by a court of law.
Where a party is alleged
to have submitted a fraudulent tax clearance or a fraudulent BEE
certificate as in this case, such a party
retains the
constitutionally entrenched right to approach the court for a relief
arising out of an exercise of a public power.
The right to challenge
the allegation on misrepresentation is antecedent to the right to
approach the Court. It goes without saying
that the mere fact that a
party is alleged to have committed fraud cannot be a reason to
deprive him or her of the legal standing
to institute the
proceedings. Baatshuma has an unquestionable standing as an affected
party. It seeks to vindicate a constitutional
right to a fair and
just administrative action. Its standing is therefore to be
determined in terms of Section 38 of the constitution.
See
Esorfranki Pipelines (Pty) Ltd and Another v Mopani District
Municipality and others,
[2014] 2 ALLSA 493
(SCA) at Paragraph 16 and
17.
[8]
The municipality further sought to argue without
force that the application was launched
out of time and therefore
unreasonably delayed. There is no merit in this contention as the
application was brought within the
180 days prescribed by PAJA even
if it were to be accepted that the Applicant became aware of the
decision to award the tender
to the second Respondent on 15 December
2020. The review application was lodged with the Registrar on 03 May
2021. There was no
delay in the launching of the application.
[9]
Earlier on I alluded to the peremptory requirements which bidders had
to comply with
before their bids can be considered for evaluation and
adjudication. These requirements fell under administrative
compliance. Once
a bidder has been found to be administratively
compliant, his or her bid will progress to the next stage for
evaluation on functionality.
The tender document clearly stated that:
the bidder must obtain a minimum score of 70% of points allocated for
quality (functionality).
The bidder who scored the highest points on
functionality will be recommended for appointment. The bidders will
be ranked according
to the points scored.
[10]
Under Revenue enhancement and Credit Control the scoring was
categorised into four areas each with its own weighting
and the
points to be allocated upon production of the requisite proof. A
bidder was required to attach signed reference letters
on credit
control environment where four or more letters entitled him/her to 30
points; attach a proof of ownership or licence
agreement in respect
of a system to be utilized. This system had to be compatible with
credit control management system and carried
30 points, the team
leader and assistant team leader had to have an experience of 10
years in municipal credit control to earn
20 points and the final 20
points were for a presentation of the project implementation plan.
[11]
The Applicant attacks the decision to award the tender to the second
respondent on the basis that it does not have the
requisite
experience and did not meet the functionality requirements of the
tender invitation. In support of this attack, Applicant
contended
that the second respondent ought not to have been awarded 30 points
on the first criteria regarding signed reference
letters as none
whatsoever was submitted. The municipality conceded that there were
no reference letters attached and the scoring
of 30 points on this
category was a mistake. The municipality has however failed to give
an explanation on how the mistake occurred,
when was it discovered
and how was it corrected. The explanation was crucial in view of the
frontal attack which the Applicant
made on the allocation of the
points. When an allegation is made in motion proceedings, it is not
enough to deny it without facts
and rely on a scanty affidavit by
another person who just state that I confirm the contents when the
contents themselves provide
no evidence to counter the allegations
made in the founding affidavit.
See
Kalil N.O and Others
v Mangaung Metropolitan Municipality Others,
2014 (5)
SA 123
(SCA
)
. Indeed, law reports are replete
with authorities that in motion proceedings an affidavit serves an
important purpose of
adducing evidence for the parties involved in a
legal dispute. A party who fails to deal with an averment made by an
opponent and/or
does so scantily in circumstances where he or she was
required to respond with some degree of detail and certainty cannot
expect
the court to come to his or her rescue. See
Wightman t/a
JW
Construction v Headfour (PTY) LTD,
2007 (2) SA 128
(CPD)
at para 12 and 14.
[12]
It is indisputable that the Municipal Manager was not part of the
evaluation and adjudication committee and therefore
does not have
first-hand knowledge of the circumstances under which the so-called
mistake occurred. One would have expected him
to establish this from
Mr Makgopa and other members of the evaluation committee and provide
in some detail as to how the mistake
happened. The municipality
failed to do so and instead dealt with this serious allegation in a
perfunctory manner. The denial that
the second respondent was
allocated points in circumstance where he was not supposed to pales
into insignificance in the face of
the record submitted by the
municipality. The denial is bald, unsubstantiated and if anything
conveys the determination and the
extent to which the municipality
was prepared to go to cover an irregularity in the award of the
tender to the second respondent.
The defence that there was a
misallocation of points is clearly a fabrication unsupported by the
record. It is disconcerting that
a municipal manager employed to
protect public funds and ensure clean administration can go to this
great length to defend a process
that is clearly tainted with
irregularity, unfairness and I dare say corruption. One would
have expected a responsible municipal
manager to demand
accountability from all the officials who were involved in the
evaluation and adjudication of this tender. This
failure by the
municipal manager to call for accountability is a manifestation of
the systemic rot prevalent in the award of tenders
by those entrusted
with the power to ensure that the objectives of the constitution are
realized.
[13]
An attempt by the municipal Manager to re-allocate the points
initially ascribed to signed reference letters
to the proof of
ownership or licence agreement category finds no favour with me for
the simple reason that no adequate explanation
occurred as to how the
second respondent was incorrectly scored. The municipality is the
custodian of the record and when it is
called upon to produce the
record, it cannot do so in drips and drabs. A record is produced for
usage by the aggrieved party and
once given it is taken that it is
complete and accurate unless stated otherwise. In this case the
municipality did confirm that
the record is complete. The contents
cannot be amended mid-stream at the whims of the municipality in
answer to the supplementary
affidavit deposed to based on the record
supplied. To allow the municipality to do so will negate the
importance of the record
and will be prejudicial to the applicant. In
a nutshell, the municipality cannot tailor its case by amending the
record on the
flimsy reason that it was incomplete or inaccurate.
[14]
The conduct of the municipal manager and that of Mr Makgopa sought to
obstruct and hinder the Applicant from continuing
with this
litigation. They together hatched a plan to cover their tracks with
the assistance of Mr Sekgololo to obfuscate issues
and create side
shows away from the real issue for consideration. This conduct should
be deprecated
[15]
In this regard, I align myself with the views of the Supreme Court of
Appeal in
Kalil N.O and Others v Mangaung Metropolitian
Municipality and others,
2014 (5) SA 123
(SCA)
where it was
said:
“
[30]
……… This is public interest litigation in that
it examines the lawfulness of the exercise
by public officials of the
obligations imposed upon them by the constitution and national
legislation. The functions of public
servants and government
officials at national, provincial, municipal levels is to serve the
public and the community at large has
the right to insist upon them
acting lawfully and within bounds of their authority. Thus where, as
here, the legality of their
actions is at stake, it is crucial for
public servants to neither be coy nor to play fast and loose with the
truth. On the contrary,
it is their duty to take the court into their
confidence and fully explain the facts so that an informed decision
can be taken
in the interest of the public and good governance. As
this court stressed in Gauteng
Gambling Board and Another v
MEC for Economic Development, Gauteng,
2013 (5) SA 24
, our
present Constitutional order imposes a duty upon state officials not
to frustrate the enforcement by courts of constitutional
rights’’.
[16]
On the basis of the findings that the second respondent was not
entitled to be awarded 30 points on
the signed reference letters
category and that it was correctly scored zero (0) on no proof of
ownership or license agreement of
a system, the application succeeds
with costs including costs of two counsel where employed.
[17]
Having found that the tender was awarded irregularly and liable to be
set- aside due to invalidity, the question
which begs for an answer
is- should the second respondent be allowed to keep the proceeds of
an invalid contract? The answer to
this question is found in the case
of
SABC SOC Ltd and Another v Mott Macdonalds SA (pty) Ltd
[2020] ZAGPHC 5
(08 December 2020)
where Keightley J gave a
useful summary of the principles to be taken into account. The
overriding consideration is the public
interest and the duty of the
court to protect the constitution as a bulwark against the plundering
of the public resources. Stamping
out unlawful procurement practices
is imperative for good governance, which is critical to the success
of our democracy. This is
why the constitution itself requires state
entities to follow proper procurement procedure.
[18]
It will be inimical to the values underpinning the Constitution to
allow any person to retain the benefits
of an irregularly awarded
tender. The second respondent colluded with the municipality to
perpetuate tender fraud and should not
be allowed to benefit out of
this conduct. In this regard, it is apposite to recall what
Sutherland J (as he then was)
said in
Mining
Qualifications Authority v IFU Training Institute (pty) Ltd [2018]
ZAGPJHC 455 (26 June 2018).
“
it
is unnecessary that a clear case of complicity (against the
contracting party) is proven; it is enough that the award was
tainted by an irregularity. Were it otherwise, the plea of an
innocent tenderer would as a matter of course outweigh the public
interest. The pendulum should usually swing the other way. What one
has not obtained through a fair and transparent process ought
not to
vest any moral claim to retain the spoils”.
[19]
Guided by the above authorities I have no difficulty in finding that
the first respondent should be ordered
to take steps to recover the
public funds. I am empowered by the constitution to give an effective
remedy sufficient to vindicate
the principles of legality and Rule of
law under the rubric of just and equitable remedy.
[20]
The Applicant also prayed for an order that the first respondent be
ordered to replace the second respondent
with the applicant as a
successful bidder. This may not be done as I am not in a position to
assess the functionality component
of the applicant`s bid. There is
also a further difficulty that the bid document has been found to be
non-compliant and that finding
has not been challenged.
[21]
Consequently, the following order is made:
The
decision by the first respondent to award Tender no: FTM/T05/20/21
to the second respondent on the 15 December 2020 is declared
invalid, reviewed and set aside.
The
contract concluded between the first respondent and the second
respondent pursuant to the award of Tender no FTM/T05/20/2021
is
void ab initio
.
The
first respondent is ordered to terminate the contract forthwith and
institute proceedings to recover all monies unlawfully
paid to the
second respondent.
The
first respondent is ordered to pay costs on attorney and client
scale inclusive of costs of two counsel.
M.I
MANGENA
ACTING
JUDGE OF HIGH COURT OF
SOUTH
AFRICA, LIMPOPO DIVISION
Appearances
For
the Applicant:
Adv
M.E Manala
Instructed
by:
Rams
Attorneys
For
the First Respondent:
Adv
AC Diamond
Instructed
by:
Machaba
Attorneys INC