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[2022] ZAECELLC 31
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EL IDZ Fibre Maintenance Venture v East London Industrial Development Zone Soc Ltd (EL395/2021) [2022] ZAECELLC 31 (22 November 2022)
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE DIVISION,
EAST LONDON CIRCUIT COURT
CASE NO. EL395/2021
In the matter between:
EL IDZ FIBRE
MAINTENANCE VENTURE
Applicant
and
EAST LONDON INDUSTRIAL
DEVELOPMENT
ZONE SOC LTD
Respondent
JUDGMENT
LAING J
[1]
This is an application for leave to amend, brought in terms of rule
28(4) of the Uniform
Rules of Court. The applicant seeks to amend its
notice of motion.
Background
[2]
On 7 April 2021, the applicant instituted proceedings for the review
and setting aside of
the respondent’s decision to nominate a
third party, Shanti Africa Construction, as the preferred bidder for
the supply,
installation and maintenance of fibre network services.
It also sought the review and setting aside of the evaluation process
and
the respondent’s decision not to award any points to the
applicant in relation to the latter’s B-BBEE level of
contribution.
The applicant, furthermore, sought the remittal of its
bid to the respondent for re-evaluation.
[3]
As an unincorporated joint venture, the applicant had submitted
separate B-BBEE verification
certificates for its constituent
members. The respondent had scored the applicant the highest number
of points for price but had
scored it zero out of a possible 20
points for having failed to submit a consolidated B-BBEE verification
certificate for the unincorporated
joint venture itself. The
applicant contended that the tender documents had not stipulated that
a consolidated certificate was
required.
[4]
On 24 August 2021, the respondent opposed the application. It raised
several points
in limine
, including the assertion that Shanti
Africa Construction, as the successful bidder, had not been joined to
the proceedings. The
main defence, however, was that the applicant’s
failure to have submitted a consolidated certificate was fatal; this
was
a requirement under the relevant code of good practice issued in
terms of the
Broad-Based Black Economic Empowerment Act 53 of 2003
and the implementation guide issued by the National Treasury
regarding the Preferential Procurement Regulations, 2017.
[5]
The respondent subsequently applied for leave to file further
affidavits, explaining that
the project had been completed. No
purpose would be served by either setting aside the award of the
tender to Shanti Africa Construction
or by re-evaluating the bids
submitted. Similarly, the applicant applied for,
inter alia
,
leave to amend its pleadings or file further affidavits so that it
could deal with the new information.
[6]
On 19 May 2022, Zilwa J granted leave to the respondent to file
further affidavits and directed
the applicant to respond thereto. The
matter was postponed to 25 August 2022.
[7]
Prior to the hearing, the applicant gave notice of its intention to
amend its notice of
motion. The intended changes were as follows:
‘
1. By
deleting paragraph 5 of the Notice of Motion in its entirety.
[1]
2. By
adding the following new paragraphs immediately following the deleted
paragraph 5 of the Notice of Motion:
“
5.
That the respondent is liable to pay just and equitable compensation
to the applicant in accordance with the provisions
of section
8(1)(c)(ii)(bb) of the Promotion of Administrative Justice Act 3 of
2000 (‘PAJA’);
6.
Postponing the matter
sine die
for a determination of the
quantum of the applicant’s loss of profits that it would have
made had the respondent awarded
it the tender issued under tender
number PROJ-ICT-092 by the respondent, or alternatively the amount of
compensation that is determined
by the court to be just and equitable
on the fact of this matter;
7.
Granting the parties leave to file further affidavits in relation to
the quantum determination as provided
in paragraph 6 above, with the
court to provide directives to the parties in relation to the
procedural timelines for the filing
of the further affidavits;
8. In
the alternative to the orders in paragraph 7 above, referring the
determination of the quantum of the of
the applicant’s loss of
profits that it would have made had the respondent awarded it the
tender issued under tender number
PROJ-ICT-092 by the respondent, or
alternatively the amount of compensation that is determined by the
court to be just and equitable
on the fact of this matter, for
viva
voce
evidence; with the court to provide directives to the
parties in relation to the procedural steps leading up to the hearing
of
viva voce
evidence.”
3. By
renumbering what is currently paragraphs 6 and 7 in the Notice of
Motion, to be paragraphs 9 and 10 respectively.’
[sic]
[8]
The respondent objected to the intended amendments. The grounds of
the objection are,
inter alia
, that: the applicant was
directed to respond to the respondent’s further affidavits,
rather than to file a notice of intention
to amend; the respondent’s
defences are fatal to the relief sought by the applicant, whether
under its existing notice of
motion or under any amendment thereto;
and no case has been made out by the applicant for the amended relief
now sought. This prompted
the applicant to file the present
application, in terms of rule 28(4).
Issues to be decided
[9]
The order of Zilwa J seems to suggest that the main review
application was postponed to
25 August 2022. On the date of the
hearing, however, the parties appeared to have been
ad idem
that only the application for leave to amend was before the court,
not the main review application. The court will decide the matter
accordingly.
[10]
The primary issue for decision is simply whether to grant leave to
the applicant to amend its notice of motion
as intended.
Legal framework
[11]
It is
well-established that the main purpose of allowing an amendment is to
ensure the proper ventilation of the dispute between
the parties, to
determine the real issues between the parties, so that justice can be
done.
[2]
The applicable
principles were summarised in
Commercial
Union Assurance Co Ltd v Waymark NO
:
[3]
‘
1. The
Court has a discretion whether to grant or refuse an amendment.
2. An
amendment cannot be granted for the mere asking; some explanation
must be offered therefor.
3. The
applicant must show that
prima facie
the amendment ‘has
something deserving of consideration, a triable issue’.
4. The
modern tendency lies in favour of an amendment if such ‘facilitates
the proper ventilation of the
dispute between the parties’.
5. The
party seeking the amendment must not be
mala fide
.
6. It
must not ‘cause an injustice to the other side which cannot be
compensated by costs’.
7. The
amendment should not be refused simply to punish the applicant for
neglect.
8. A
mere loss of time is no reason, in itself, to refuse the application.
9. If
the amendment is not sought timeously, some reason must be given for
the delay.’
[4]
[12]
Generally,
the court’s discretion regarding the granting of a material
amendment is limited only by considerations of prejudice
or injustice
that may be caused to the other party.
[5]
[13]
The above principles constitute the basic legal framework for the
court’s exercise of its discretion.
These must be applied to
the facts of the present matter.
Application of the law
to the facts
[14]
Admittedly, the applicant’s intended amendment in the present
matter would not appear to affect the
actual dispute between the
parties, viz. whether the awarding of no points to the applicant for
its B-BBEE level of contribution
was unlawful (and consequently
whether the award of the tender to Shanti Africa Construction was
unlawful). If the main issue between
the parties remains the same,
argues the applicant, then a court will generally allow an amendment.
[15]
The
authority for this is
Tomassini
v Dos Remedos
,
[6]
where the applicant had initially claimed specific performance of a
contract regarding the sale of a business, only to apply, later,
to
amend his pleadings to claim damages after the sale could not be
implemented. The court identified the main issue as being whether
the
parties had indeed concluded a contract; this was common to either of
the applicant’s claims in question. The amendment
was allowed
because the main issue stayed the same.
[16]
It is
important to observe, however, that the applicant in the present
matter has not denied the respondent’s allegations
in its
further affidavits to the effect that the project is complete.
Consequently, there appears to be no basis upon which the
applicant
could persist in its prayers for the review and setting aside of the
decision to nominate Shanti Africa Construction
as the preferred
bidder, the evaluation process, and the decision not to award any
points to the applicant for its B-BBEE level
of contribution. There
also appears to be no basis upon which to seek the remittal of its
bid.
[7]
To all intent and
purposes, the dispute between the parties has become moot. The only
remaining issue seems to be that of costs,
unless the applicant can
place new information before court in response to the respondent’s
further affidavits (which it
has so far failed to do).
[17]
The amendment sought by the applicant would introduce new issues.
These are whether the applicant has suffered
a loss of profit and
whether (and to what extent) the applicant would be entitled to just
and equitable compensation. The immediate
difficulty facing the
applicant is that there is little support in the founding papers for
the relief claimed. The closest that
the applicant comes in this
regard is the following averment:
‘
Due to the
respondent’s wrongful action, the applicant is suffering
financial loss due to the fact that the applicant is losing
out on
the ability to make a profit from the project to which the tender
relates and the ability to claim the credit which would
come with
having undertaken the project and having completed it.’
[sic]
[18]
Leaving
aside the question of whether the applicant can, in these
circumstances, convert its application to a claim for damages,
as
opposed to instituting action proceedings, the more serious
difficulty is that the case law demonstrates that no claim lies
for a
loss of profit as a result of irregularities in the tender
process.
[8]
The claimant is
required to prove dishonest or fraudulent conduct on the part of the
defendant’s officials before any such
claim will be
entertained.
[9]
The principle
was confirmed by the Constitutional Court in
Steenkamp
NO v Provincial Tender Board, Eastern Cape
,
[10]
where Moseneke DCJ held that:
‘…
Compelling
public considerations require that adjudicators of disputes, as of
competing tenders, are immune from damages claims
in respect of their
incorrect or negligent but honest decisions. However, if an
administrative or statutory decision is made in
bad faith or under
corrupt circumstances or completely outside the legitimate scope of
the empowering provision, different public
considerations may well
apply.
…
Imposing
delictual liability on the negligent performance of functions of
tender boards would open the prospect of potential claims
of
tenderers who had won initially. This will be to the detriment of the
invaluable public role of tender boards. A potential delictual
claim
by every successful tenderer whose award is upset by a court order
would cast a long shadow over the decisions of tender
boards. Tender
boards would have to face review proceedings brought by aggrieved
unsuccessful tenderers. And should the tender
be set aside it would
then have to contend with the prospect of another bout of claims for
damages by the initially successful
tenderer. In my view this spiral
of litigation is likely to delay, if not weaken the effectiveness of
or grind to a stop the tender
process. That would be to the
considerable detriment of the public at large. The resources of our
state treasury, seen against
the backdrop of vast public needs, are
indeed meagre. The fiscus will ill-afford to recompense by way of
damages, disappointed
or initially successful tenderers and still
remain with the need to procure the same goods or services.’
[11]
[19]
The above
approach has been followed consistently by our courts.
[12]
[20] In
the present matter, the applicant makes no allegation that the
conduct of the respondent’s officials
was dishonest or
fraudulent. There is no evidence at all to that effect.
[21]
Similarly, regarding the claim for just and equitable compensation,
the applicant has not demonstrated why
this is an exceptional case,
such that an order directing the respondent to pay compensation would
be warranted. The provisions
of section 8(1)(c)(ii)(bb) of the
Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’)
are clear:
‘
8.
Remedies in proceedings for judicial review
.—(1)
The court or tribunal, in proceedings for judicial review in terms of
section 6(1), may grant any order
that is just and equitable,
including orders–
(a) …
(b) …
(c) setting
aside the administrative action and–
(i)
…
(ii) in
exceptional cases–
(aa) …
(bb) directing the
administrator or any other party to the proceedings to pay
compensation…’
[22]
A recent
decision of the Supreme Court of Appeal clarifies what is required of
a litigant before relying on section 8(1)(c)(ii)(bb)
of PAJA. In
Esorfranki
(Pty) Ltd v Mopani District Municipality
,
[13]
the court observed that:
‘…
It is
settled law that negligence and incompetence is insufficient to
ground liability in the context of public procurement. Only
where
there is “something more” can a plaintiff recover her
lost bargain. In the same vein section 8(1)(c)(ii)(bb)
provides that
only in exceptional circumstances could payment of compensation be a
just and equitable remedy. It appears that “something
more”
or an “exceptional circumstance” occurs where the tender
is vitiated by fraud or where there was bad faith
and malice on the
part of the tender board…’
[14]
[23]
Consequently, it would be necessary for the applicant to prove that
there was something unusual, out of the
ordinary, or special, about
the respondent’s tender process to justify an order directing
the respondent to pay compensation.
The applicant has made no
allegations in that regard.
[24] In
short, no cause of action exists on the papers to sustain the relief
sought by the applicant in terms
of the intended amendment.
Relief and order to be
granted
[25]
It is a
well-established principle that an amendment will not be allowed
where excipiability would result.
[15]
The respondent has pointed out that the applicant relies on alleged
unlawful administrative action as a result of an error in law
and
pursuant to a decision taken capriciously, arbitrarily, and
irrationally. The applicant has simply not demonstrated that the
conduct of the respondent’s officials was dishonest or
fraudulent; it has not demonstrated why this is an exceptional case,
such that section 8(1)(c)(ii) of PAJA should be applied.
[26]
Consequently, the court is not satisfied that the intended amendment
will, with reference to the principles
summarised in
Commercial
Union Assurance Co Ltd v Waymark NO,
give rise to anything
deserving of consideration or a triable issue. If allowed, then the
amendment would constrain the respondent
to pursue its opposition to
an application for relief that cannot be sustained on the papers. An
exception would be bound to follow.
Overall, the potential prejudice
to the respondent, if leave is granted, is plain to see.
[27] In
the circumstances, the following order is made:
(a) the
application for leave to amend 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
Coto, instructed by Tshangana
Attorneys, East London.
For the
respondent: Adv
Buchanan SC, instructed by
Smith Tabata Inc, East
London.
Date of
hearing: 25
August 2022.
Date of delivery of
judgment: 22
November 2022.
[1]
The
relevant paragraph was a prayer for the remittal of the applicant’s
bid to the respondent for re-evaluation. The applicant
sought, in
the same prayer, a directive that the respondent recognizes the
applicant as a Level 1 B-BBEE contributor.
[2]
Rosenberg
v Bitcom
1935
WLD 115
, at 117. The principles have subsequently been applied in a
long line of case, but see, more recently,
Blaauwberg
Meat Wholesalers CC v Anglo Dutch Meats (Exports) Ltd
[2004] 1 All SA 129
(SCA), at 133 h-I; and
Macsteel
Tube and Pipe, a division of Macsteel Service Centres SA (Pty) Ltd v
Vowles Properties (Pty) Ltd
(unreported, SCA case no 680/2020, dated 17 December 2021), at
paragraph [24].
[3]
1995 (2) SA 73
(Tk), at 77F-I.
[4]
The
summary was cited with approval in
Affordable
Medicines Trust v Minister of Health
[2005] ZACC 3
;
2006 (3) SA 247
(CC), at 261C.
[5]
DE
van Loggerenberg,
Erasmus:
Superior Court Practice
(Jutastat, RS 18, 2022), at D1-332.
[6]
1961
(1) SA 226
(W), at 227F-228E.
[7]
The
applicant has expressly indicated its intention to abandon such
relief by deleting paragraph 5 of its notice of motion, as
evident
from its notice of intention to amend.
[8]
Olitzki
Property Holdings v State Tender Board and another
[2001] ZASCA 51
;
2001
(8) BCLR 779
(SCA), at paragraph [31], subsequently cited with
approval in
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007 (3) BCLR 300 (CC).
[9]
Minister
of Finance and others v Gore NO
[2007] 1 All SA 309
(SCA), at paragraph [90];
South
African Post Office v De Lacy and another
[2009] 3 All SA 437
(SCA), at paragraph [4].
[10]
See
n 8, supra.
[11]
At paragraph [55].
[12]
See,
for example,
Trustees
of the Simcha Trust (IT1342/93) v De Jong and others
[2015] 3 All SA 161
(SCA), at paragraph [30].
[13]
[2021] 3 All SA 686 (SCA).
[14]
At
paragraph [90].
[15]
Heydenrych
v Colonial Mutual Life Assurance Society Ltd
1920
CPD 67
; see, too, more recently,
YB
v SB
2016 (1) SA 47
(WCC), at 51E-F.