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[2022] ZAECMHC 28
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Jolwana Mgidlana Inc v Port St Johns Local Municipality and Others (1771/2021) [2022] ZAECMHC 28 (2 August 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
[EASTERN
CAPE LOCAL DIVISION, MTHATHA]
CASE
NO: 1771/2021
In
the matter between:
JOLWANA
MGIDLANA
INC
Applicant
and
PORT
ST JOHNS LOCAL MUNICIPALITY
First Respondent
MUNICIPAL
MANAGER: PORT ST JOHNS LOCAL
MUNICIPALITY
Second Respondent
W.T
MNQANDI AND
ASSOCIATES
Third Respondent
BATE
CHUBB AND DICKSON INC.
Fourth Respondent
SIYATHEMBA
SOKUTU ATTORNEYS
Fifth Respondent
MAGQABI
SETH ZITHA ATTORNEYS INC.
Sixth Respondent
JUDGMENT
DAWOOD
J:
[1]
The applicant herein instituted review proceedings against the
respondents wherein
it claimed the following relief:
“
1
Reviewing and setting aside the decision by the first respondent (as
embodied in the letter of the
second respondent dated 24 February
2021, a copy of which is attached to the founding affidavit as
annexure “JOL1”)
to reject the applicant’s bid.
2
Reviewing and setting aside the decision of the first respondent (as
embodied in the
letter by the second respondent dated 13 April 2021,
a copy of which is attached to the founding affidavit as annexure
“JOL2”)
dismissing the applicant’s appeal against
its exclusion from adjudication under the tender.
3
The adjudication of all tenders for Bid No.: PSJLM-MM-2020/21-15 for
serving on a panel
of law firms for a period of three years is
remitted to the first respondent for reconsideration by the first
respondent’s
Bid Evaluation Committee, Bid Adjudication
Committee and by the second respondent.
4
In adjudicating all tenders in terms of prayer 3 above, the first
respondent’s
Bid Evaluation Committee, Bid Adjudication
Committee and the second respondent are directed to do so having
regard to the following:
4.1
The applicant has satisfied the requirement of possession of an
indemnity certificate.
4.2
All bidders who have submitted a valid fidelity fund certificate must
be regarded as having submitted
a valid indemnity certificate.
5
The first respondent shall make its final decision regarding the
success of the applicant’s
tender within 30 calendar days of
the grant of this order.
6
The respondents are ordered to pay the costs of this application,
including the costs
of three counsel.
7
That further and/or alternative just and equitable relief be granted
in the applicant’s
favour”.
[2]
It is common cause that the applicant`s bid to be on the panel of law
firms was not
successful and the following reasons were furnished: -
“
JOLWANA
MGIDLAN INC
13 April 2021
Dear Sir or Madam
RE: LETTER OF
OBJECTION –PSJLM-MM 2020/2021-15 TENDER FOR SERVING IN A PANEL
OF LAW FIRMS FOR A PERIOD OF THREE YEARS
We refer to your letter
of objection dated 10
th
March 2021, we hereby confirm that
your tender was received and adjudicated fairly as other bidders your
bid was responsive up
to the stage of tender administration.
Your bid was not
successful on the functionality in terms of tender document page 28
(find attached) KEY COMPETENCE required that
the bidder to be in
possession of an INDEMNITY CERTIFICATE.
Upon perusal of your
tender document, it was noted that you did not attach the required
document as a key competence
Yours in developmental
local government
Mr H.T Hlazo”.
[3]
The applicant alleged inter alia: -
(a) That the decision
made on 24 February 2021 was made without good reason as at that
stage no reasons were provided nor were they
informed of their right
to appeal the decision to reject their bids or of their right to
request reasons for the decision and accordingly
that the court
should make the presumption that the decision was made without good
reason. (As can be seen from paragraph 2 above
reasons were provided
albeit at a later stage not at the stage that the decision was
initially conveyed to the applicant.)
(b) The applicant alleged
further that the decision to reject the applicant`s bid was based on
reasonable suspicion of bias.
(i) The applicant based
this on the fact that the basis of the rejection was because of the
failure to attach a professional indemnity
whereas it is common cause
that possession of a valid fidelity fund certificate entitles the
applicant and its directors to a professional
indemnity cover by the
Legal Practitioners Indemnity Fund and the applicant was in
possession of a valid fidelity fund certificate
at the relevant time.
(ii) The fidelity fund
certificate of two of the directors were attached at the time the
second respondent took the decision to
reject the applicant`s tender
on the basis that it had failed to prove that they had indemnity
cover.
(iii) The bid evaluating
committee concluded that the applicant had met all the requirements
and recommended the appointment of
the applicant, together with 11
other bidders.
(iv) The bid adjudication
committee made the finding that the applicant`s tender was responsive
and functional. It concurred with
recommendations of the first
respondent`s bid evaluation committee.
(v) The second respondent
rejected the applicant`s tender on the basis that the applicant had
not provided an indemnity certificate.
(vi) The second
respondent disregarded the fidelity fund certificate that the
applicant had submitted as part of its tender.
(vii) The second
respondent awarded the tender to the fifth and sixth respondents in
circumstances where the fifth and sixth respondents
attached a proof
of indemnity insurance from the Legal Practitioners Indemnity
Insurance and relied on the Legal Practitioners
Indemnity Fund as to
the issue of an indemnity certificate.
(viii) The third
respondent was appointed in circumstances where the third respondent
had failed to attach proof of qualified staff
members.
(ix) The policy by the
Legal Practitioners Indemnity Insurance Funds provides that it covers
every attorney and legal practice with
a fidelity fund certificate.
(x) The policy was before
the second respondent when he rejected the applicant`s tender.
(c) The applicant on the
above basis alleged that the decision not to award the tender to the
applicant and in awarding the tender
to the other respondents, the
second respondent:
(i) was influenced by
bias;
(ii) the second
respondent ignored relevant considerations and took into account
irrelevant considerations;
(iii) was so unreasonable
and acted in a manner so unlawful, unconstitutional and irrational
that a reasonable and rational decision
maker would not have made
such a decision;
(iv) took a decision that
is not rationally connected to the purpose for which it was taken;
(v) took a decision that
is not rationally connected to the reasons given for it by him;
(vi) took a decision that
is not rationally connected to the information that was before him
when he took the decision;
(vii) acted in a manner
that is procedurally unfair so that the decision itself was unfair;
(viii) acted in a manner
that is substantially irrational so that the decision itself was
irrational.
(d) In any event the
requirement to submit an indemnity certificate was irrational,
immaterial, unreasonable, capricious and procedurally
unfair since
the indemnity cover is extended to the whole class of bidders equally
and with uniformity and the first respondent
did not specify in the
tender documents if it needed indemnity cover over and above what is
statutorily offered to all attorneys
by the Legal Practitioners
Insurance Indemnity.
(e) The applicant
accordingly prayed:
(i) That the second
respondent`s decision rejecting the applicant`s tender is reviewed
and set aside.
(ii) The second
respondent`s decision which is contained in JOL2 is reviewed and set
aside.
The matter is remitted to
the second respondent for reconsideration with or without the
following requirements:
i) There is no applicable
requirement for possession of indemnity certificate to be met in
respect of bidders who are in possession
of a valid fidelity fund
certificate;
ii) No party or bidder
that submitted a bid under the tender should be penalised or excluded
or disqualified because it has failed
in its bid submission to
include an indemnity certificate when that party or bidder has
furnished a valid fidelity fund certificate.
(f) In the further
supplementary affidavit the applicant averred inter alia: -
(i) that Section 1 of the
Procurement Act defines an acceptable tender as any tender which, in
all respects, complies with the specifications
and conditions of
tender as set out in the tender document.
(ii) A municipality is
accordingly obliged to consider an “acceptable” tender.
(iii) Under key
competencies “Possession of Indemnity Certificate” was
listed.
The applicant`s bid was
disqualified because the first respondent considered that: -
a) It was a requirement
of the bid document that a bidder had to attach a copy of its
indemnity certificate; and
b) that the applicant did
not meet this requirement in that it had not attached a copy of its
indemnity certificate.
(iv) The applicant went
on to set out the requirements of the bid: -
(aa) It is the
responsibility of the bid specification committee to compile the bid
specifications and such specifications must
be clearly set out in the
bid document itself.
(bb) The bid
specifications committee stipulated: -
which documents had to be
attached to a bid and what information had to be submitted as part of
the bid and what the consequences
would be of a failure to attach a
document to a bid or submit it as part of the bid.
(cc) It does say any
other information to support the project must be provided.
(dd) It stipulates that a
failure to provide any of the above particulars may render the bid
invalid.
(ee) Bidders shall submit
with their bids the information that is applicable and as may be
required in respect of the specifications.
(ff) The employer
reserves the right, in the event of such details being insufficient,
to call for further information from the
bidder.
(v) In relation to a
bidder’s indemnity certificate and fidelity fund certificate,
nowhere in the bid specifications, bid
documents or the advertisement
does the first respondent state that a bidder was required to attach
the indemnity certificate or
the fidelity certificate. The bid
specifications, bid document or the advertisement does not specify
how the fact that a tenderer
is in possession of the certificates had
to be conveyed to the first respondent.
(vi)The applicant
submitted a fidelity fund certificate which served the functions of
informing the first respondent that the applicant
was in possession
of a fidelity fund certificate and in possession of indemnity cover
which accrues automatically to a practitioner
if he or she has a
fidelity fund certificate.
(vii) The first
respondent was entitled to call for further information if it was
uncertain more especially where such uncertainty
arose from its
failure to specify in express terms how a particular requirement was
to be satisfied.
(viii) The bid
adjudication committee misunderstood the bid specifications and the
applicant`s bid:
(aa) it was not a
requirement of the bid that a bidder attach its indemnity
certificate;
(bb) secondly, it was not
correct that the applicant did not have an indemnity certificate or
that it had failed to provide proof
thereof.
(cc) Nowhere in the bid
document or the advertisement is it stipulated that a tenderer should
attach the indemnity certificate as
part of its tender.
(dd) The actual
requirement is that the tenderer ought to be in possession of an
indemnity certificate or be in a possession of
an indemnity cover.
The applicant had indemnity cover.
(ee) The document itself
under key competencies states:
(3) possession of
Indemnity Certificate;
(4) possession of
Fidelity Fund Certificate.
(ff) The other tenderers
had submitted copies of Indemnity Policy issued by the Legal
Practitioners Indemnity Insurance Fund.
(gg) The bid evaluation
committee found that the applicant`s claim was responsive and should
be considered for appointment. The
score sheet indicates that the bid
evaluation committee considered that the applicant had not attached a
copy of its indemnity
certificate and penalised it by giving it 0
(zero) for failure to attach a copy of its indemnity certificate.
(hh) The bid adjudication
committee concurred with the bid evaluation committee that all 13
bidders were responsive on compliance
and functionally but disagreed
with it on the “functionality assessment” because 9
bidders that the Bid Evaluation
Committee recommended did not adhere
to the core competencies that was requesting that the bidders must
provide the Indemnity Certificate
as is stated on the tender document
as a fundamental requirement.
(ii) The bid adjudication
committee considered the indemnity certificate as a fundamental
requirement. Non-compliance thereof would
lead to disqualification.
On the other hand, it says that all the bids were responsive. This
means that the committee considered
that all bids complied with the
fundamental requirements and should not be disqualified.
(jj) The first respondent
was not permitted to disqualify the applicant on the basis that it
had failed to provide an indemnity
certificate. At worst for the
applicant, it could have given the applicant zero points as the Bid
Evaluation Committee had done.
(kk) The bid document did
not provide that failure to attach an indemnity certificate would
lead to disqualification of a bidder.
They failed to properly
consider all the information that had been placed before them.
(ll) The second
respondent accepted the recommendations of the Bid Adjudication
Committee and accordingly adopted the problems highlighted
above.
(mm) The applicant was
disqualified on the basis of a requirement that did not form part of
the bid specifications.
(nn) Bids should only be
evaluated in respect of the criteria stipulated in the bidding
document and that to amend the criteria
after the closure of the bids
would jeopardise the fairness of the system.
(oo) The decision to
disqualify the applicant`s tender on the basis that it had not
attached a copy of its Indemnity Certificate
to its bid document:
(i) was based upon a
reason not authorised by the empowering provision, see Section 6
(2)(e)(i) and (f) (1) of PAJA;
(ii) was based upon
irrelevant considerations, Section 6 (2)(e)(iii) of PAJA;
(iii) was taken
arbitrarily and capriciously, Section 6 (2)(e)(vi) of PAJA;
(iv) was not rationally
connected to the purpose for which it was taken, the purpose of the
empowering provision, the information
before the first respondent.
(pp) If the Bid
Adjudication Committee had been consistent, the failure of the third
respondent to employ at least two appropriately
qualified staff
should have been resulted in it being disqualified. Yet he was not
disqualified but recommended to be appointed.
The fifth respondent
was given zero by the Bid Evaluation Committee for not being in
possession of a valid fidelity fund certificate
but he was not
disqualified and instead recommended for appointment and the second
respondent accepted the recommendation.
(qq) It is to be noted
that upon perusal of the document submitted there was indeed a
fidelity fund certificate by the fifth respondent.
(rr) The approach adopted
by the Bid Adjudication Committee was inconsistent and it was
endorsed by second respondent.
(ss) The applicant`s
decision to reject the applicant`s tender and to disqualify the
applicant should be set aside.
(hh) Prayer: -
(aaa) The decision to
reject the applicant`s tender to disqualify the applicant should be
set aside.
In the alternative;
(bbb) Set aside the
decision of the second respondent and the decision of the Bid
Adjudication Committee and refer the adjudication
of the tenders back
to the Bid Adjudication Committee for reconsideration of all tenders
with instructions to consider the bid
of each tenderer who submitted
proof that it was in possession of a valid fidelity fund certificate
and therefore in possession
of indemnity cover with the Legal
Practitioners Indemnity Insurance Fund NPC,
[4]
The first respondent states inter alia in the answering affidavit
that: -
(i) the applicant has
fundamentally misconceived of not only a key aspect of the tender
document, but of the nature of insurance
a firm of attorney must and
may hold.
(ii) that the applicant
has failed to demonstrate how the tender process was flawed and that
its tender was compliant;
(iii) the first
respondent emphasises that there is no challenge to the invitation to
bid document which lists six key competencies
and if any of the
listed items are not satisfied by a bidder then the bid is
non-compliant and cannot be accepted.
(iv) Item 3 and 4 concern
different concepts;
(v) Item 3 states
“possession of indemnity certificate”’, item 4
states “possession of fidelity fund certificate”.
(vi) A Fidelity Fund
Certificate is not an indemnity certificate and contrary to the
applicant`s submissions are wholly different;
and
(vii) one cannot serve to
prove the other;
(viii) the two are dealt
with by different institutions and their purposes are different.
(ix) Indemnity cover is
not satisfied by the “protection” a fidelity fund
certificate offers.
(x) the Professional
Indemnity Insurance Policy is issued by the Legal Practitioners
Indemnity Insurance Fund NPC.
This body is distinct
from the Legal Practitioners Fidelity Fund and has a different
purpose.
(xi) the first respondent
concedes that every legal practitioner, who is in possession of a
valid Fidelity Fund Certificate automatically
enjoys a certain level
of professional indemnity cover in terms of the Legal Practitioners
Indemnity Insurance Fund policy.
(xii) the first
respondent however states that items 3 and 4 of the invitation to bid
competencies clearly envisaged that as part
of the bid an applicant
attorney must demonstrate that it (the bidder) has indemnity cover
over and above what it may enjoy solely
by virtue of being in
possession of a fidelity fund certificate evidenced by these being
set as different and separate items.
(xiii) The invitation to
bid required a bidder to demonstrate that it had both a fidelity fund
certificate and separate indemnity
cover.
(xiv) The separate
indemnity cover is not the policy issued by the Legal Practitioners
Indemnity Insurance Fund as an automatic
consequence of having a
Fidelity Fund Certificate which only covers liability in respect of
those items contemplated by Section
55.
(xv) The applicant is
accordingly covered by the Section 55 conduct but not separate
indemnity cover, as required by the bid document
and accordingly the
applicant has failed to demonstrate that it has satisfied the bid
requirements.
(xvi) The first
respondent avers that the applicant seeks an order affecting the
entire tender process in paragraph 3 of the amended
notice of motion
failing to take into account any contracts that may have been entered
into between Port St Johns Municipality
and any of the successful
bidders.
(xvii) The applicant
without impugning the terms of the bid seeks to amend the bid
document by seeking an order directing Port St
Johns Municipality to
consider all bidders who have submitted a Fidelity Fund Certificate
to be regarded as having submitted a
valid indemnity certificate.
(xviii) The relief has
procedural and substantive difficulties. Port St Johns Municipality
has made it clear that it invited attorneys
who possess both a valid
Fidelity Fund Certificate and Indemnity Cover.
(xix) If Port St Johns
Municipality only intended to require a Fidelity Fund Certificate, it
would have not set out two separate
competencies (possession or
having a Fidelity Fund Certificate and possession of a certificate
concerning Indemnity Cover as it
did in the invitation to bid
document.
(xx) The rejection of the
applicant`s bid was lawful. It was not unreasonable, arbitrary or
capricious. The applicant avers at paragraph
22 that the bid
requirements are irrational, unreasonable and capricious yet it seeks
no relief in respect of the bid requirements.
(xxi) The applicant by
not challenging the bid requirements as unlawful, must be regarded as
accepting the lawfulness of the bid
requirements.
(xxii) A tender which is
irregular or has shortcomings may not lawfully be accepted.
(xxiii) The applicant
does not and did not possess a separate certificate reflecting that
it has and had separate indemnity cover
and to rely on the fidelity
fund certificate is misplaced.
(xxiv) The applicant is
correct that it was rejected because it did not possess and provide a
certificate reflecting indemnity cover.
(xxv) The fidelity fund
certificate provided by the applicant does not satisfy the separate
requirement of indemnity cover.
(xxvi) The acceptance or
otherwise of other bids which included different documentation is
irrelevant to the application.
(xxvii) The first
respondent averred that the fact that the applicant misread or
misunderstood the bid is unfortunate for it. But
that does not mean
the bid process was in any way flawed.
[6]
(i) With regard to the second supplementary affidavit the respondent
stated that two
separate and different certificates were contemplated
and it cannot be correct for the applicant to contend that the
fidelity fund
certificate served the two identified functions.
(ii) The first respondent
accepted that it knew the legal industry and the legal framework
governing legal services as set out in
paragraph 3 of the applicant`s
further supplementary affidavit and that is why it included the
requirement of both a Fidelity Fund
Certificate and a certificate
concerning Indemnity Cover.
(iii) The applicant did
not have the indemnity cover and did not possess a certificate
proving it as required by the bid specification
requirements, and as
a fact, it did not attach it.
(iv) The applicant`s bid
was lawfully rejected by Port St Johns Municipality.
(v) The applicant does
not possess an indemnity certificate.
[7]
In its replying affidavit the applicant inter alia: -
(i) Avers that the second
respondent`s understanding of the tender requirements and the bid
document submitted by the tenderers
is at odds with the views of
these committees.
(ii) The Bid Adjudication
Committee and the Bid Evaluation Committee did not have a uniform
approach to key competences.
(iii) The Bid
Adjudication Committee found the tender responsive but gave it zero
for the Indemnity Certificate whereas the Bid
Evaluation Committee
found it responsive but rejected it or disqualified it because it
failed to comply with a fundamental requirement.
(iv) Hlazo does not
identify where in the bid specifications, bid document or tender
advertisement it states that as part of the
bid, an applicant
attorney must demonstrate that it has indemnity cover over and above
the cover that it may enjoy solely by virtue
of having a Fidelity
Fund Certificate.
(v) If Hlazo`s
understanding is correct then the applicant does not meet the
requirements. But Hlazo`s argument is wrong. There
is nothing
contained in the bid specification, bid document or tender
advertisement to support his argument.
(vi) He has awarded a
tender to two tenderers in direct conflict with his own understanding
of the tender requirements without furnishing
an explanation.
(vii) The applicant
alleged that the understanding as expressed in the answering
affidavit was a recent fabrication.
[8]
Issues for adjudication: -
(i) The most vital issue
for determination is whether or not the applicant complied with a key
competency since it is evident that
if they demonstrate that there
has been compliance then the decision was wrong and must be set aside
on one or more of the grounds
set out in PAJA.
(ii) The subsidiary issue
is:
(a) Since there is no
challenge to the bid specifications, bid document or the
advertisement what exactly were the key competencies
as set out in
the document and how was compliance to be demonstrated.
(iii) Prof Cora Hoexter
eloquently explained the nature of judicial review as follows:
‘
The
nature and scope of review limit its potential effectiveness as a
mechanism for controlling administrative action and providing
relief
to aggrieved individuals. Although the distinction between legality
and the merits is increasingly difficult to uphold,
a central and
enduring feature of judicial review is the courts’ reluctance
to encroach too freely on the preserve of administrators.
The
carefully crafted rules of administrative law thus aim to ensure that
the scope of a judge’s inquiry is restricted, and
that the
courts do not deal with the substantive issues that lie at the heart
of administrative disputes. For this reason, appeal
on the merits to
an administrative tribunal is often a better way of achieving the
substantive satisfaction that judicial review
tends to preclude.
Judicial review is largely incapable of giving the applicant what he
or she
r
eally
wants: a substantively favourable decision.
[1]
(iv) The applicant
alleged that nowhere in the advertisement, the bid specifications or
the bid documents did the first respondent
state that a bidder was
required to attach the indemnity certificate or the fidelity fund
certificate. Thus uncertainty arose from
its failure to specify in
express terms how a particular requirement was to be satisfied.
(v) The applicant however
despite this averment, has failed to challenge the advertisement, the
bid specifications or the bid documents
or request that it be set
aside.
(vi) In any event the
applicant seems to have understood that it needed to attach a
document to establish that it was in possession
of the same. It
attached the Fidelity Fund Certificate claiming that it satisfied
both requirements. Accordingly, the argument
that the bid document
did not set out how possession was to be demonstrated does not avail
the applicant in this case.
(vii) The criticism
levelled is however warranted in that the first respondent ought to
have specified that the Fidelity Fund Certificate
and the Indemnity
Insurance Certificate should be submitted for absolute clarity.
(viii) The most
substantive basis by the applicant for the attack on its exclusion,
is that the applicant was disqualified on the
basis of a requirement
that did not form part of the bid specifications.
(ix)
In
Down
Touch Investments v Matjhabeng Local Municipality and Another
[2]
the
court had the following to say: -
“
(8)
It is common cause that the applicant was eliminated during the
second phase of the evaluation process. It is also undisputed
that
the sole reason advanced by the first respondent for not awarding the
tender to the applicant was the fact that the applicant
had not
submitted completion certificates for purposes of proving its
experience in respect of similar projects. The first respondent
revealed that non-submission of completion certificates resulted in
the applicant being allocated zero points for the key staff
and
experience component of the functionality criteria, which in turn led
to the conclusion that the applicant did not achieve
the minimum
threshold of 60% on functionality, resulting in the applicant`s
disqualification.
(9) The nub of the
applicant`s case is that the submission of completion certificates
was not stipulated as one of the requirements
for the tender and, as
a result, its subsequent disqualification from the tender process on
account of a requirement that was not
disclosed to tenders was
unfair, irrational and unlawful. The applicant further asserts that
the decision to award the tender to
the second respondent violated
its right to participate in a tender process that is transparent and
fair and falls to be reviewed
and set aside. (Own emphasis)
(11)
Section 217 of the Constitution
[3]
enjoins a constitutionally fair, equitable, transparent, competitive
and cost-effective procurement system. The legislative framework
under that section provides the context within which judicial review
of state procurement must be assessed.
[4]
Given the fact that a decision to award a tender constitute
administrative action, the provisions of the Promotion of
Administrative
Justice Act 3 of 2000 (PAJA) apply, thus granting a
cause of action for the judicial review of tender process.
[5]
(15) With regard to the
merits of the review application, it is necessary to consider whether
the evidence on record establishes
the factual existence of
contraventions of PAJA, and whether there is a justification for the
setting aside of the award. Of great
importance is whether there is
any evidence showing that the submission of completion certificates
was one of the requirements
of the tender…
(24) The Constitutional
Court held that the suggestion that “inconsequential
irregularities” in a tender process were
irrelevant when
reviewing the tender amounted to a conflation of the test for
irregularities and their import. It held that an
assessment of the
procurement process must be independent of the outcome. The AllPay1
judgment recognises the important role that
compliance with specified
procedural requirements plays in levelling the playing fields by
ensuring equal and fair treatment of
all bidders and simultaneously
acknowledges that the purpose of a fair process is to ensure the best
outcome of the tender process:
- The following extract from that
judgment is apposite: “Deviations from fair process may
themselves all too often be symptoms
of corruption or malfeasance in
the process. In other words, an unfair process may betoken a
deliberately skewed process. Hence
insistence on compliance with
process formalities has a three-fold purpose: (a) it ensures fairness
to participants in the bid
process; (b) it enhances the likelihood of
efficiency and optimality in the outcome; and (c) it serves as a
guardian against a
process skewed by corrupt influences.”
(26) The court is alive
to the fact that the need for the upgrading of roads is indeed a
crucial service that needs to be delivered
to communities. This,
however, is not to say that such projects must be undertaken at all
costs, to the extent of dispensing with
the checks and balances that
procurement processes have put in place with a view to enhancing the
likelihood of efficiency and
optimality in the outcome of the tender
process. A consideration of the ITB and the Tender Data makes it
clear that the overarching
objective is to ensure that the tender is
awarded to a company that not only has technical capacity resources
for the completion
of the Works within the contract period but one
that can do so cost effectively. It is common cause that the
difference between
applicants bid and the second respondent`s one is
R847 667.76. under such circumstances, it cannot be said that
the purpose
of the stipulated tender requirements was objectively
achieved. I can do no better than to simply re-iterate what was
stated in
the
AllPay 1 judgment
: “
Once a ground of
review under PAJA has been established, there is no room for shying
away from it
”.
(27) I am therefore
satisfied that the applicant has, in its review application adduced
evidence that has conclusively shown that
the first respondent`s
decision to award the tender to the second respondent was unfair,
irrational and unlawful. The applicant
has established a ground of
review as contemplated in section 6 of PAJA. Since the purpose of the
tender requirements has not been
achieved, the award of the tender to
the second respondent must be set aside.
(x) The applicant
accordingly pleaded that to amend the criteria after the closure of
the bid would jeopardise the fairness of the
system.
Down`s
case support this proposition.
(xi) This aspect needs to
be interrogated as to whether or not indeed the criteria was amended
in this offer after the closure of
the bid as if it had that result
then the fairness of the system would be jeopardised as per the dicta
in
Down`s
case cited above which aptly, eloquently and
correctly, in my view deals with the issue.
(xii) The first
respondent, in response states that the bid competencies clearly
envisaged that as part of the bid an applicant
must demonstrate that
it has indemnity cover over and above that which it may solely enjoy
by virtue of being in possession of
a Fidelity Fund Certificate.
There was no amendment to the criteria but rather an enforcement of
the provisions of the tender as
it was, if one has regard to their
argument.
(xiii) The first
respondent avers that this is demonstrated by the fact that these
were set as different and separate criteria and
also had different
points allocated to them.
(xiv) The bid document
admittedly did not explicitly state that what was envisaged was that
the applicant must demonstrate that
it was in possession of indemnity
cover over and above that which was automatically available to all
attorneys who were in possession
of a valid fidelity fund
certificate.
(xv) It clearly is not a
model of clarity particularly having regard to the fact that 9, and
if we consider the documents attached
by two of the respondents, at
least 11 firms of attorneys did not understand the requirement.
(xvi) As already
indicated above the legality of the bid documents was unfortunately
not challenged.
(xvii) The bid documents
set out two (2) separate, distinct and different key components: -
(3) possession of
indemnity insurance;
(4) possession of
fidelity fund certificate.
(xviii) The
applicant submitted and the first respondent accepted that it was
aware that all practitioners who were in possession
of a valid
Fidelity Fund Certificate qualified for automatic albeit limited
indemnity insurance.
(xix) The evaluation
criteria on functionality assessment demonstrates that possession of
an Indemnity Fund Certificate entitled
the bidder to being awarded 22
points and being an accredited member of the Law Society of South
Africa and in possession of a
fidelity fund certificate accounted for
23 points to be awarded to the bidder.
(xx) The first respondent
would not have set it as a separate requirement in circumstances
where it is accepted by the applicant
that the first respondent was
aware that attorneys are entitled to limited automatic insurance by
virtue of being in possession
of a Fidelity Fund Certificate and the
first respondent has confirmed this knowledge on its part.
Accordingly, the first respondent
could not have envisaged this as
the Indemnity Fund Certificate it required since there would have
been no need to set this as
a separate requirement as possession of
the Fidelity Fund Certificate would have sufficed to establish
possession of the automatic
insurance.
(xxi) The requirement
could only be for the bidder to be in possession of indemnity cover
over and above the automatic indemnity
cover afforded by being in
possession of a Fidelity Fund Certificate.
(xxii) Accordingly it was
not adding to, or amending the criteria after the closure of the bid
since this is a requirement already
specified in the bid document
admittedly not in an explicit manner. There would have been no need
for it to make possession of
an Indemnity Fund Certificate a
requirement if it intended it to be the automatic one that accrues to
all practitioners in good
standing who are in possession of a
Fidelity Fund Certificate.
(xxiii) There is
accordingly no unfairness in requiring the applicant to comply with a
key competency. The requirement was not added
on after the tender, it
appears ex facie the bid document and the advertisement.
(xxiv) The applicant has
correctly conceded that if it is found that possession of a separate
Indemnity Insurance was a requirement
then it did not possess the
same. The applicant accordingly failed to satisfy a key competency.
The applicant was accordingly correctly
excluded in the
circumstances.
(xxv) The applicant
unfortunately in the circumstances is not entitled to the relief it
seeks as it failed to prove it had complied.
(xxvi)
The applicant`s exclusion was warranted as it was not in possession
of the requisite Indemnity Cover and accordingly did
not comply with
a key competency.
(xxvii)
There was an objective and lawful reason for the exclusion of the
applicant accordingly the rejection was not unreasonable,
arbitrary
or capricious. The applicant was rejected because it did not possess
and provide a certificate reflecting the requisite
indemnity cover.
(xxviii) The bids of the
unsuccessful candidates according to the averment made by the
applicant appear to have been rejected for
the same reason that the
applicant was demonstrating equal treatment in this regard.
(xxix) The successful
candidates who may have had flaws in them are beyond the purview of
this court as the applicant did not challenge
the successful bids.
(xxx) The first
respondent did not deal with the awarding of the bids to the
successful bidders as the tender process as a whole
was not
challenged nor did the applicant seek to set aside the entire bid
process or the successful bids on the basis that the
process as a
whole was tainted by bias or unequal treatment or any of the other
grounds set out in PAJA. The fact of the matter
is that the applicant
was properly rejected for failure to comply.
(xxxi) As I have already
indicated the bid document was not a model of clarity and I do not
believe that the challenge was reckless
particularly having regard to
the number of firms of attorneys that misunderstood the requirements.
(xxxii) This clearly is a
case where equity and fairness dictates in the circumstances that I
exercise my discretion with regard
to the question of costs and
deviate from the norm that costs follow the result, and instead order
that each party pay its own
costs.
[9]
The order I make is accordingly the following:
The
application is dismissed with no order as to costs.
FBA DAWOOD
JUDGE OF THE HIGH
COURT
Date heard: 21 April 2022
Judgment delivered: 02
August 2022
Appearances
For the
applicant:
Adv G Halley SC with Adv AM Bodlani SC,
Adv L Ntikinca and Adv B
Maswazi
Instructed by:
Z. Mfiki Inc.
No. 63 Cnr Park &
Lakeway Road
Mthatha
Tel:
047 531 3255
For the respondents:
Adv A Katz SC
Instructed
by:
V. Funani Attorneys
Unit 3 Phyllis Court
No. 49 Cumberland Street
Mthatha
Tel:
047 531 1719
[1]
Cora Hoexter
Administrative
Law in South Africa
2 ed (2011) at p 167.
[2]
Down
Touch Investments (Pty) Ltd v Matjhabeng Local Municipality and
Another (1172/2016)
[2016] ZAFSHC 131
(8 April 2016)
[3]
Section
217 of the Constitution Act 108 of 1996.
[4]
AllPay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer of the South African Social Security Agency
and
Others
2014 (1) SA 604
(CC) (
Allpay
Judgment).
[5]
2014
(1) SA 604
(CC) at para 41.