About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, East London Local Court
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, East London Local Court
>>
2022
>>
[2022] ZAECELLC 30
|
|
Shine Africa Financial Services (Pty) Ltd v Buffalo City Metropolitan Municipality (EL 1056/2022) [2022] ZAECELLC 30 (8 November 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, EAST LONDON CIRCUIT COURT
CASE
NO. EL 1056/2022
In
the matter between:
SHINE
AFRICA FINANCIAL SERVICES (PTY)
LTD
Applicant
and
BUFFALO
CITY METROPOLITAN MUNICIPALITY
Respondent
JUDGMENT
LAING
J
[1]
This is an application for,
inter alia
, a declarator to the
effect that the respondent’s sale of tender documents, without
making them available free of charge,
is unconstitutional and
unlawful. The applicant also seeks: an interdict preventing the
evaluation and adjudication of the tenders
in question, and the
implementation of the contracts arising from the award thereof; and
an order directing the respondent to refund
all bidders from whom it
accepted payment.
[2]
The application was brought on an urgent basis.
Background
Applicant’s
case
[3]
The applicant claims to be a potential bidder that was precluded from
submitting a bid for one of the tenders that form the subject of the
application. It asserts that the respondent advertised four
different
tenders during May and June 2022: the supply of refuse bags, the
design and installation of bronze statues in Duncan
Village, and the
establishment of townships for settlements at Tyutyu and Nompumelelo,
respectively. The respondent indicated that
tender documents would be
available at its offices upon payment of various non-refundable
amounts, ranging from R200 to R500.
[4]
Subsequently, the applicant complained to the respondent, pointing
out
that the latter was obligated to have made the tender documents
available on its website. No response was received, prompting the
applicant to launch the present proceedings.
[5]
The basis for the applicant’s argument is that the respondent
has
flouted the provisions of the National Treasury guidelines for
accounting officers in relation to the charging and collecting of
a
fee for tender documents. Furthermore, contends the applicant, the
respondent has contravened the Public Finance Management Act
1 of
1999 (‘PFMA’) inasmuch as the sale of the tender
documents resulted in an unfair and non-competitive tender process;
this was also in contravention of section 217(1) of the Constitution.
[6]
The applicant asserts that other organs of state provide tender
documents
on their websites, free of charge and in accordance with
the National Treasury guidelines. It is entitled to participate in a
lawful
tender process and argues that it must be granted interim
relief. About urgency, the applicant says that the respondent will
appoint
successful bidders based on an unlawful tender process; this
will result in irregular expenditure.
Respondent’s
case
[7]
The respondent raises two points
in limine
. It challenges the
alleged urgency of the matter, arguing that the applicant has not
explained its delay in launching the application
and pointing out
that the possible incurring of irregular expenditure did not render
the matter urgent. Furthermore, the respondent
asserts that the
applicant has failed to join the parties that submitted bids for the
tenders in question.
[8]
Regarding the merits, the respondent says that it is entitled to
charge
and collect a reasonable fee for tender documents, reflecting
the cost of printing and delivery to bidders. The applicant was being
unreasonable in refusing to pay a modest fee to participate in a
tender process from which it stood to gain significant income
while
expending vast sums of money to institute legal proceedings.
In
reply
[9]
The applicant contends, in reply, that any delay (which is denied)
was
caused by the respondent’s refusal to deal with the
applicant’s complaint. The application was launched at about
the
same time that the tenders closed. As to non-joinder, the
applicant contends that it was incumbent on the respondent to have
provided
the names and addresses of the bidders. It has not done so,
despite being in possession of the tender briefing and bid opening
registers, as well as the bids themselves.
[10]
Turning to the merits, the applicant argues that the National
Treasury guidelines only
permit the sale of tender documents when
necessary. The respondent has failed to demonstrate such necessity.
The actual costs of
printing are considerably lower than the fee
charged and collected by the respondent; moreover, the respondent has
not accommodated
the situation where a bidder wishes to print the
tender documents itself, when the respondent is unable to make
printed copies
available free of charge. The applicant insists that
the respondent has a duty to make the tender documents available on
its website,
as envisaged in terms of the standard conditions of
tender that applied.
History
of proceedings
[11]
The application was enrolled for hearing on 12 July 2022 but fell to
be struck from the
roll by Tokota J for lack of a proper index and
pagination.
[12]
The applicant subsequently brought an interlocutory application,
termed a notice of reinstatement,
by means of which it sought to
obtain an order that,
inter alia
: directed the respondent to
furnish the tender briefing and bid opening registers; directed the
applicant to serve a copy of the
application upon the bidders for the
tenders in question; and joined such bidders to the proceedings.
[13]
When the interlocutory application was heard on 10 August 2022, the
relief sought in terms
thereof was refused by Zilwa J. The main
application, only, was reinstated for hearing on 23 August 2022.
Issues
to be decided
[14]
The points
in limine
must be determined at the outset. These
could prove decisive, failing which the court would need to determine
the merits of the
matter, which pertain to the crisp issue of whether
the respondent’s sale of the tender documents, without making
them available
free of charge, is unlawful.
[15]
From the history of the matter, non-joinder is an issue that is very
relevant to the proceedings.
Non-joinder
[16]
The test
for joinder has been distilled to the following: any person is a
necessary party and should be joined if such person has
a direct and
substantial interest in any order that the court might make;
alternatively, if such an order cannot be sustained or
carried into
effect without prejudicing such person, unless he or she has waived
the right to be joined.
[1]
[17]
The issue
can become complicated where numerous parties are affected. In
Road
Accident Fund v Legal Practice Council
,
[2]
the parties took various steps to notify (potential) necessary
parties about the relief that was sought. The court held as follows:
‘
[t]his matter, in
my view, is one where the joinder of the many thousands of parties,
that could be affected by the order of this
court, is unnecessary in
the light of the steps taken by the RAF to notify as many parties of
its application as possible. The
steps taken are adequate. The number
of affected parties is substantial, and the steps taken by the RAF to
notify the sheer volume
of parties that could be affected were
sufficient to effect their joinder. Only the seventeenth to
twenty-third respondents responded
and were joined in these
proceedings. The failure to respond by those who were notified can be
taken to equate to a waiver of the
right to be joined.’
[18]
Even
informal notification of a necessary party may suffice in
circumstances where the party has indicated, unequivocally, that
it
will abide by the decision of the court.
[3]
The point is that notification must be given. A necessary party has a
right to participate in the proceedings and must be permitted
to
exercise such right by making submissions before the court
adjudicates the dispute, notwithstanding the fact that numerous
parties may be involved. If a person has a direct and substantial
interest in an order that may be given by a court or that cannot
be
implemented without causing prejudice to such person, then he or she
must be joined unless he or she has clearly communicated
his or her
intention to abide by the order to be given or otherwise waived the
right to participate in the proceedings.
[19]
In the present matter, the applicant argues that it would only have
been necessary to have
joined the bidders for the tenders in question
where the evaluation of their bids had been completed. Their right to
participate
in the tender process remains unaffected and no awards
have been made.
[20]
The factual basis for the applicant’s assertions is not evident
from the papers.
There is nothing to indicate whether either the
evaluation or adjudication of the bids has occurred; there is nothing
to indicate
whether any awards have subsequently been made. The
question, however, is not whether the evaluation of the bids has been
completed
or whether the respondent has awarded the tenders. The
question is whether the bidders are necessary parties who should have
been
joined.
[21]
To answer
that, the nature of the possible order must be considered. The
applicant seeks the following relief,
inter
alia
:
that the respondent’s conduct be declared unlawful and that it
be interdicted from continuing with the evaluation of the
bids,
appointing bidders, concluding any contracts with the appointed
bidders, or implementing any obligations in terms thereof.
[4]
The bidders for the various tenders would have prepared and submitted
their bids with a view to securing their appointment for
the goods or
services required- and the concomitant income stream in the event
that they were successful. According to the answering
papers, it is
apparent that the tender for the supply of refuse bags would have
been of significant interest to prospective suppliers;
the client
would be one of the country’s large metropolitan
municipalities, responsible for the delivery of waste disposal
services to an extensive urban community, and for a period of three
years. A total of 57 bids were recorded in the bid opening
register
and the quoted prices reflect values running into many millions of
rand. It hardly needs saying that the contract would
be an important
source of income for the successful bidder over several financial
years. Likewise, the tender for the design and
installation of bronze
statues would be of much interest to potential suppliers for whom,
presumably, such work would not often
be available. There were only
five bidders according to the answering papers, but the quoted prices
also run into millions of rand.
It is not unreasonable to expect
similar interest and values for the remaining tenders for the
establishment of townships, entailing
the provision of planning and
related professional services.
[22]
That the bidders have a direct and substantial interest in an order
that could interdict
the respondent from evaluating their bids,
awarding the tender in question to any one of them, or executing the
contract that arises,
is obvious. To put it another way, an order to
that effect cannot be sustained or given effect without causing
prejudice to any
bidder that has submitted a bid for any of the
indicated tenders.
[23]
The
applicant has referred to the decision in
Bhala
Traditional Council v Dumezweni and others
[5]
where the court dealt with the unlawful sub-division, demarcation and
allocation of land in the Flagstaff district. The respondents
raised
the point of non-joinder, arguing that the applicant had failed to
join the committee that had been established to represent
the
interests of some of the villages in the area and of which the
respondents were members. The court found, however, that it
was not
necessary to have done so inasmuch as the applicant only sought
relief against the respondents in their personal capacities;
it was
not clear that the respondents had been acting in their capacities as
members of the committee. The decision is of no assistance
in the
present matter.
[24]
Furthermore,
the applicant referred to
Judicial
Service Commission and another v Cape Bar Council and another
,
[6]
where the court confirmed that it had become settled law that the
joinder of a party was only required as a matter of necessity
where
that party has a direct and substantial interest that may be affected
prejudicially by the judgment of the court. The mere
fact that a
party may have an interest in the outcome of the litigation did not
warrant a plea of non-joinder; the right to raise
such an objection
was limited. Similarly, the decision is of no assistance in the
present matter. This court has already found
that the bidders for the
various tenders in question have more than just an interest in the
outcome; the test for joinder has been
met and the bidders must be
deemed to have a direct and substantial interest in the order that
this court may give, alternatively
that such an order cannot be
implemented without causing prejudice to them.
[25]
In its replying papers, the applicant points out that the respondent
is in possession of
the particulars of the bidders, including their
contact details. The applicant does not have these. If the respondent
has relied
on the point of non-joinder, then it should have furnished
the applicant with the bidders’ particulars and contact details
to have enabled the applicant to have dealt with the point and to
have arranged for proper service. This was not possible in the
circumstances.
[26]
The
applicant seems to have missed the point somewhat. As
dominus
litis
,
the applicant (assisted by its legal team) is responsible for shaping
its cause of action, working out the nature of relief to
be sought,
and identifying the necessary parties. It must prepare and execute a
strategy that will adequately manage the many variables
that come
into play once the decision to litigate has been taken. These include
the problem of dealing with a multiplicity of (potential)
necessary
parties. Insofar as time does not allow the applicant to use the
available statutory tools for purposes of obtaining
information in
anticipation of litigation,
[7]
the Uniform Rules of Court can assist once proceedings have started.
[27]
The facts of the matter at hand lend themselves, moreover, to a
review application under
rule 53. If the procedure had been followed
correctly, then the respondent would have been required to have
produced the record
of the decisions, including the tender briefing
and bid opening registers, from which the particulars and contact
details of the
bidders would have been apparent. It is not evident on
the papers that the applicant was ever prevented from adopting such
an approach.
Without intending to make any specific finding in
relation thereto, the court is not at all convinced that the matter
was as urgent
as the applicant contends.
[28]
In
Insamcor
(Pty) Ltd v Dorbyl Light & General Engineering (Pty) Ltd; Dorbyl
Light & General Engineering (Pty) Ltd v Insamcor
(Pty) Ltd
,
[8]
the court held as follows:
‘
[28] …in
some instances it would be wellnigh impossible to join every party to
a contract with the deregistered company and
any other third party
who may be prejudicially affected by the registration order as
respondents in the application. That, however,
is not a novel
dilemma. It often arises in cases where necessary parties may be
numerous and sometimes even unknown. For many years
this problem has
been resolved by the mechanism of issuing a rule
nisi
, as an
alternative to actual joinder of all necessary parties…
[29] …since
failure to react to the rule
nisi
will give rise to deemed
consent, proper care should be taken in issuing directions as to
service of the rule. Where a particular
party can be identified a
priori as a necessary party… service of the rule on that party
should be directed, while notice
to unknown potentially interested
parties can be ensured through publication of the rule…’
[29]
It may have been preferable for the applicant to have adopted a
similar strategy, relying
on a rule
nisi
to obtain the
particulars and contact details of the bidders and subsequently
joining them to the proceedings. This was never done.
[30]
Ultimately, it was not the respondent’s responsibility to have
ensured that the applicant
was fully armed with the relevant
information before embarking upon litigation. It was up to the
applicant, as
dominus litis
, to have identified the necessary
parties beforehand and to have prepared and executed an appropriate
strategy with regard to joinder.
Relief
and order
[31]
The determination of the question about the lawfulness of an organ of
state’s not
making tender documents available, free of charge,
would certainly be of interest to supply chain management
practitioners, potential
bidders, and lawyers who practise in this
field. However, the vehicle by which to do so must be up to the task.
The present application
is not well-considered; it is replete with
shortcomings, of which non-joinder is simply the most immediate. On
its own, the point
of non-joinder is sufficient to deny the relief
sought by the applicant.
[32]
The respondent has sought costs on an attorney-and-client scale.
However, the court has
confined its focus to the point of non-joinder
and has not considered the question of urgency or the remaining
issues. There is
no basis upon which to deviate from the usual relief
that should follow in that regard.
[33]
In the circumstances, the following order is made:
(a)
the application is dismissed; and
(b)
the applicant is directed to pay the respondent’s costs.
JGA
LAING
JUDGE
OF THE HIGH COURT
APPEARANCE
For the
applicant:
Adv Nyangiwe, instructed by Moletsane PN Attorneys, East London.
For
the respondent:
Adv Zietsman, instructed by Wesley Pretorius & Associates Inc,
East London.
Date
of hearing:
24 August 2022
Date
of delivery of judgment:
08 November 2022
[1]
DE
van Loggerenberg,
Erasmus:
Superior Court Practice
(Jutatstat, RS 16, 2021), at D1-124. See, too,
Kethel
v Kethel’s Estate
1949 (3) SA 598
(A), at 610;
Amalgamated
Engineering Union v Minister of Labour
1949 (3) 637 (A), at 659; and, more recently,
Watson
NO v Ngonyama
2021 (5) SA 559
(SCA), at paragraph [52].
[2]
2021
(6) SA 230
(GP), at paragraph [10].
[3]
In
re
BOE
Trust Ltd and others NNO
2013 (3) SA 236
(SCA), at 242A-C.
[4]
The
applicant has, in relation to the interdictory relief sought,
separated the various sub-paragraphs by means of ‘and/or’.
This is not always a helpful approach inasmuch as it may leave the
respondent (and the court) in doubt about what exactly the
applicant
seeks. At the least, it would be expected of the applicant to
present sufficient evidence upon which to contend that
it is
entitled to all or a portion of the relief stipulated in its notice
of motion, rather than make vague allegations and hope
that the net
has been cast wide enough to result in a catch of some sort. The
onus of proof remains with the applicant.
[5]
(
3486/2018)
[2018] ZAECMHC 17 (3 June 2020), at paragraph [26].
[6]
2013
(1) SA 170
(SCA), at paragraph [12].
[7]
The
most obvious example is the procedure contained in the Promotion of
Access to Information Act 2 of 2000 (‘PAIA’).
[8]
2007
(4) SA 467
(SCA).