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[2021] ZALMPPHC 5
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Greter Tzaneen Local Municipality v Tshiamiso Trading 135 (Pty) Ltd (5267/2019) [2021] ZALMPPHC 5 (28 January 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
REPORTABLE:
NO
/YES
OF
INTEREST TO OTHER JUDGES:
NO
/YES
REVISED.
28/1/2021
CASE
NO:5267/2019
In
the matter between:
GRETER
TZANEEN LOCAL MUNICIPALITY
APPLICANT
AND
TSHIAMISO
TRADING 135 (PTY) LTD
RESPONDENT
(Registration
no: 2013/110686/07)
JUDGMENT
MG
PHATUDI J
INTRODUCTION:
[1]
The apparent rigour of declaring conduct in conflict with the
constitution and PAJA unlawful is ameliorated
in both the
constitution and PAJA by providing for a just and equitable remedy in
its wake. I do not think it is wise to attempt
to lay down inflexible
rules in determining a just and equitable remedy following upon a
declaration of unlawful administration
action. The rule of law must
never be relinquished, but the circumstances of each case must be
examined in order to determine whether
factual certainty requires
some amelioration of legality and, if so, to what extant…”
[1]
[2]
The underlying dispute in this case between the parties, as I
understand, is that this court should
order as appropriate ‘just
and equitable remedy’ within the meaning of the provisions of
Section 172(1) (b) of the
Constitution Act 1996.
[2]
(RSA) (“the Constitution”)
FACTUAL
BACKGROUND:
[3]
On 12 October 2018 the Applicant published two separate invitations
to tender in the local newspapers
within Mopani District namely, the
Letaba Herald and Mopani Herald dated 12 and 26 October 2018,
respectively.
3.1 These
invitations were annexed to the Applicant’s papers and
identified as “BS
2
” and “BS
3
”,
respectively.
3.2 I shall
for the purpose of completeness refer to annexure “BS
2
”
being Bid no: SCMU 15/2018 for the upgrading of Mulati access road as
“the mulati Tender” while annexure “BS
3
”,
being Bid no: SCMU 21/2018 for the upgrading of Nkowankowa Codesa
Street to Hani Street as “the Codesa Tender”.
3.3 Both
tenders were evaluated on the 80/20% preference point scoring system
on pricing. A successful bidder would
be required to be evaluated and
attain a minimum scare of 70% in respect of functionality.
3.4
There is no dispute that both tenders were compliant with Applicant’s
Supply Chain Policy
[3]
. (“SCM”)
the tender documents referred to includes a Bill of Quantities
(“BOQs”) with attached rates for
each bid.
3.5 The
scoring of all bids according to the Applicant were based on the
bidder’s tender price and not the
rates for individual items
offered.
[4]
I consider it unnecessary for present purpose to set out in details
how the Respondent allegedly circumvented
the arithmetical
exactitudes or methodology to secure its appointment in respect of
both Mulati and Codesa bids. Full details are,
however, provided in
the founding affidavit (“FA”) (pp13-14”) and I seem
to be the common cause or at least not
being disputed as
“miscalculations or errors” in the answering affidavit. I
shall focus deeper into these apparent
disparities when I evaluate
the evidence in the course of this judgment.
[5]
It was these “errors” or call “misrepresentations”
in the pricing of both tenders
that the Applicant concluded that they
had tipped the scales in favour of the Respondent to have had two
bids awarded to the latter
as the lowest in the prices.
THE ISSUES:
[6]
Fast-tracking. On 20 December 2018 the Applicant awarded the Codesa
tender referred to in favour of
the Respondent. The amount awarded
was R 9 217 610.99. subsequent thereto, and within a month, on21
January 2019, the Respondent
was awarded a further tender for Maluti
access road. (“the Mulati tender”) the amount awarded was
R 26 842 512.88.
[7]
By law
[4]
both tenders had to
awarded to a bidder who scored the highest points using 80/20% for
pricing thereof.
7.1
This appears to be the case as no objective criteria was stipulated
in the tenders as envisaged by Regulations
2017 currently
applicable
[5]
.
7.1 The
said regulations envisaged that “if an organ of state intends
to apply objective criteria in the
tender documents”
7.3 It
is not clear why the Applicant’s officials charged with the
procurement process and management of
the SCM Policy has palpably
elected not to stipulate the objective criteria in the advertised bid
documents as prescribed in the
said regulation.
[8]
Failure by the Applicant to adhere to the precept laid down in the
regulation referred to in my view,
boardered on arbitrary abdication
of administrative accountability. This failure resulted in invariably
in the illegality complaint
of. This also because the beginning of a
comedy of errors in this matter.
[9]
To obviate these “miscalculations” or” inadvertent
errors” the Respondent
was required to apply simply a
method of adding up the total figures at the end of each leaf of the
BOQs to arrive at the total
tender price, applying simple arithmetic.
9.1
However, what the Respondent did in both impugned tenders, was to
calculate the total amounts attached to
the BOQs incorrectly. These
incorrect calculations are said to be “casting errors” in
the “AA”. But, there
is no plausible explanation as to
how the Respondent succeeded in ensuring that the alleged “casting
errors” came about
to have it catapulted as a successful bidder
in respect of the two multi-million rand tenders it had won in a
short space of time
as already indicated. Here, one could sense the
“smell of Denmark” so to speak.
EVALUATION
OF THE EVIDENCE:
[10]
The respondent in its answering affidavit
[6]
(‘AA”) intimated in paragraph 3.6 that:-
“
Both the tenders
contain “casting errors” in that the figure appearing in
the body of the bill of quantities(“BOQs”)
asindididual
line items were incorrectly brought forward on to the summary page.
These casting errors were not deliberate, but
rather in adverted”.
10.1 The ‘casting
errors’ referred to by one Mr Samuel Kaputa (“Kaputa”)
on a confirmatory affidavit
[7]
.
10.2 The deponent
Kapata, a self-confessed qualified civil engineer himself, testified
therein on behalf of the Respondent
that he had attended to compete
the tenders in haste and “on their closing date” He, in
error allegedly used subtotals
as opposed to the totals. This
miscalculation were collated in figures for both tenders.
10.3 Incidentally,
similar miscalculated figures were made in respect of both
tenders
[8]
.
10.4 Kapata, in the
penultimate paragraph of his affidavit noted that he was “embarrassed
of the quality of my work,
which was stated before, was prepared in
haste. He furthermore, tendered an apology to his employer, (the
Respondent) the Applicant
and to the court for his mistakes.
[11]
This court having noted these comedy of errors however only express
its sentiments that the explanation for
the errors is viewed in a dim
light. This is particularly so for the following reasons: -
11.1 The
Respondent’s “AA” depict itself as a company
established in 2008 which also possesses both “C.I.B.D”
certificate in construction industry and level B- BBEE status.
11.2 The Respondent
is also portrayed as an experienced business entity particularly in
construction tenders. Its company
profile evince that it has acquired
“established track record in securing tenders”. That much
is borne out but the
fact that it “has been involved in 35
successful tenders “in the past.
11.3 Against this
backdrop, one could only wonder how with its repository of knowledge,
skills and past experience, that accurate
pricing of the bids have
managed to skip through the kapata’s fingers.
11.4 The time
period within which the two tenders where awarded to the Respondent
for such amounts, raises question. (±
1 month punctuated by
festive season)
11.5 Moreover, what
was even disconcerting was failure by Kaputa to explain why the
casting errors had the very fortuitous
effect that the Respondent’s
prices were by a narrow margin the cheapest if not the lowest. What
is more, is that this unusual
coincidences occurred in respect of the
two tenders in respect of the same company.
11.6 Furthermore,
there is no explanation as to the reasons why from the closing date
of the two bids to the date of
appointment the Respondent
conveniently failed to apprise the Applicant of the “casting
errors”
[12]
In a semblance of these discrepancies, proffered by the Respondent is
not only illogical, but completely spurious.
It must therefore be
discounted for lack of credibility.
[13]
That said, the answers the Respondent purported to provide in
justification of the miscalculations made suggest
that there was
clearly a well calculated misrepresentation of the tender price or
rates offered be it intentionally or negligent
misrepresentation, the
effect of which misled the Applicant resulting in the allocated bids.
[14]
The above observation, it appears to me to find credence by the
concession made by Mr. Hlamani Bruce Mohlala on
behalf of the
Respondent that: -
“
Kaputa made
mistakes, which appear to have misled the Applicant into awarding the
Respondent’s both tenders.”
14.1 The
respondent’s attention regarding the alleged “casting
errors’ was drawn to it that the Applicant
had been led astray
when it made the award of the tenders to the former. Furthermore, and
in a more definitive concession “it
further appears from the
tender documents attached to the founding affidavit that, but for the
casing errors, the Respondent would
not have been the successful
tenderer in either tenders.”
[9]
[15]
To that extent, and against the submission by the Respondent that it
only opposed the present application on the
basis of the relief
sought by the Applicant in Paragraphs 6 and 7 of the notice of
motion, I am reinforced in my view that the
Respondent in as much as
it has conceded to the illegality of the awarded bids, could not have
without more countervailed the said
unlawfulness.
[16]
In the results, I am obliged to declare, as I hereby do, pursuant to
the provisions of section 172(1) (a) of the
Constitution, that the
decision of the Applicant to award both Maloti and Cosesa tenders to
the Respondent are from inception unlawful
and invalid. Similarly the
declaration of invalidity would taint the agreement concluded by the
parties arising from the impeached
tenders awarded equally unlawful
and of no force or effect.
THE ISSUES:
JUST AND EQUITABLE
REMEDY:
[17]
It is common cause that the prayers sought in the notice
of motion,
in particular, paragraph 1 to 5 are not in dispute. That much is
borne out in the answering affidavit. (Para: 3.12,
“AA”)
in terms of which the Respondent had consented thereto. Both parties
agree that the impugned decision is in impeachable.
17.1 While
consenting to the granting of the said prayers, there remains in
dispute the question whether or not to consider
the remedied as
proposed by the Applicant on the one hand among others things, to
compensate the respondent for the actual expenses
incurred in the
execution of both tenders, or to claim from the Respondent the
pecuniary loss suffered occasioned by excess payment
to it. The
latter claim is, in essence, one founded upon the principles of
unjustified enrichment (
condictio sine causa
) for over
payment, if any and in circumstances where the Applicant was
impoverished.
17.2 In an
alternative to the foregoing proposals, (para:3 to 7 of the prayers)
is what form of a just and equitable relief
would in terms of section
172(1) (b) of the Constitution be deemed appropriate in the
circumstance.
17.3 The Respondent
on the other side contended that the engineer of both projects be
mandated, at its costs, to determine
the market related values of the
work actually executed and the work still to be executed, and if
successful, the Applicant be
ordered to compensate the former
accordingly for the market value thereof.
[18]
I find myself at variance with this submission for the following
reasons: -
18.1 No doubt, both
Maluti and Codesa tenders were unlawfully awarded to the Respondent.
The decision to award the bid floated
the Applicant’s SCM
Policy.
18.2 The decision
to have awarded the two tenders had also clearly offended the
provisions of section 217(1) of the Constitution.
This section is the
cornerstone of procurement process sought by organs of state at all
tears of government in South Africa. I
shall revert later in this
judgment to deal with its constitutional imperatives.
[19]
Counsel for the Applicant, Mr. Maritz SC made several submissions in
favour of offering payment for actual expenses
the Respondent has
incurred. He contended, among other things, that the counter
application technically seeks an order to have
the tender awarded to
the respondent regard being had to paragraphs 5,6 and 7 of the
counter application.to do so will be to allow
an indirect replacement
of the BOQs initially offered with new ones drawn up by the
respondent’s civil engineers views of
market related rates. I
agree.
19.1 If one were to
follow the approach as proposed by Mr. Riff SC for the respondent, it
would amount to this court usurping
the constitutional mandate set
apart for the Applicant which is an organ of state. See in general,
Trencon Construction (Pty) Ltd
v IDC of South Africa
[10]
.
19.2 Furthermore,
the submission made on behalf of the Respondent that it be allowed to
complete the remaining portion of
the work on both Maluti and Codesa
projects is with respect legally untenable. To do so, would be
indirectly asking an order to
perpetuate the illegality. This will
not be fair or equitable in the public interest nor interest of
justice.
19.3 In other
words, such a relief would also be contrary to the common law adage
ex turpi causa non oritor actio
. (from a dishonourable cause
no action arises). This is simply because the law will not benefit a
litigant for relief if it arises
from own tortious act.
[20]
Accordingly, this court finds that the impugned decision cannot be
permitted to morph into a valid act as “a
court of law play the
role of abiter of legality”
[21]
The enquiry therefore is as stated in the preamble (para 1) regarding
what relief this court should grant as a
just and equitable remedy.
That is the crisp issue.
[22]
The starting point should be the guidance provided by section 217(1)
of the Constitution. It provides that: -
“
When an organ of
state in the national, provincial or local sphere of government, or
any other institution identified in national
legislation, contracts
for gods or services, it must do so in accordance with the system
which is fair, equitable, transparent,
competitive and
cost-effective.”
PROCUREMENT
SECTION 217 (1):
22.1 The language
of section 217(10 is plain. It applies whenever an organ of state
‘contracts for goods or services’.
These words are
unambiguous and crystal clear.
22.2 By the same
token, section 217(1) requires of an organ of state such as the
Applicant, when contracting for goods or
services to be mindful of a
system that is ‘fair, equitable, transparent, competitive and
cost-effective’.
[23]
It follows therefore that any procurement contracted by an organ of
state which is not responsive to the imperative
language of section
217(1) would in my view be at odds with that constitutional provision
and therefore invalid. The requirements
under section 217 must be
understood within the realm of the constitutional precepts on
administrative justice in section 33 and
the broad fundamental values
and principles governing administration. (chapter 10)
[24]
The other subsidiary legislation yet crucial is the
Preferential
Procurement Policy Framework Act, 2000
[11]
.
(“PPPFA”). It provides that “
an
acceptable tender” is any tender which in all respects,
complies with the specifications and conditions of tender as set
out
in the tender document…
[12]
. It already indicated,
the two tenders under scrutiny are replete with inaccuracies
miscalculations and’ casting errors’,
so-called. It can
therefore not be said that if fulfils the requirements of
section 1
of PPPFA, nor the procurement process was fair
[13]
.
[25]
The above observation resonate well with the sentiment expressed by
Schults JA in the case of PREMIER, FREE STATE
AND OTHERS V FIRECHEM
FREE STATE (PTY) LTD Where the learned Judge stated that:-
“
One of the
requirements… is that the body adjudicating tenders be
presented with comparable offers in order that its members
should be
able to compare… yet another requirements is that sense that
they should be treated equally, in the sense that
they should all be
entitled to tender for the same thing. Competitiveness is not served
by only one or some of the tenderer. Knowing
what is the true subject
of the tender… that could deprive the public of the benefit of
an open completive process”.
I cannot agree more.
25.1 The Applicant
in causa
failed to meet the threshold laid down by Schultz JA
in that case when it awarded the tender in a manner that was not
fair, transparent,
or competitive.
[26]
Against this backdrop, and having declared the decision to have
awarded the two tenders to the Respondent (Para:16)
unlawful and
therefore constitutionally invalid the next step is to make an order
for a just and equitable remedy. Tis is on line
with the approach
adopted by the court in ALL PAY INVESTMENT HOLDINGS (PTY) LTD V CHIEF
EXECUTIVE OFFICER S SASSA AND OTHRES
[14]
[27]
Section 127(1) (a) of the Constitution grants this court a wide
judicial discretion when dealing with constitutional
matter. The
relevant section provides that:
SECTION 127(1) (a):
“
When When deciding
a constitutional matter within its power, a court -
(a)
must declare that any law or conduct that is inconsistent with the
Constitution is invalid to the extent
of its inconsistency; and
(b) may make any
order that is just and equitable, including –
(i)---
(ii)---“
[28]
It is common cause that this court is required in terms of section
172(1)(b) to find a just and equitable remedy
that is justifiable in
this circumstances peculiar to the present case. The merits of each
case will determine a particular just
and equitable remedy which of
course is a discretionary matter.
[29]
This court in the matter of EPHRAIM MOGALE LOCAL MUNICIPALITY v
INKOKELI PROJECTS (PTY) LTD AND OTHERS
[15]
with approval a passage from ALL PAY consolidated
“
49
It is against this
backdrop that “logic, general legal principle, the Constitution
and the binding authority of this courts
all point to a default
position that requires the consequences of invalidity to be corrected
or reversed where they can no longer
be prevented. It is an approach
that accords with the rale of law and principle of legality”.
CONCLUSION:
[30]
I must commend the Applicant, as an organ of state, for the effort it
took
albiet ex post facto
for having deleted tenders manup,
lations that were replete with misrepresentations and misstatements
that has causally led to the
Respondent being awarded the two tenders
illegally.
30.1 It was this
kind of often deletion that casts an obligation upon organs of state
to act decisively against any enterprise
or institution that obtained
a preference on a fraudulent basis.
[31]
for all the considerations a foregoing, in am of the view that the
following order would be fair and equitable
in the circumstances.
[32]
It was for the reason, and, for which I align myself with the view
espoused by Mogoeng J (as he was) in VIKING
PONY AFRICA PUMPS (PTY)
LTD t/a TRICOM LTD V HYDRO-TECH SYSTEM (PTY) LTD AND
ANOTHER
[16]
,where the
learned Judge writing for the court held that:-
“
Whenever
an enterprise is plausibly accused of having furnished false
information in its tender documents, the organ of state responsible
for the tender is, upon becoming aware of the alleged
misrepresentation, under an obligation to investigate the matter.
This stems
from the tenderer’s obligation to vouch for the
truthfulness and correctness of the information provided in terms of
regulation
14”
[33]
Accordingly, for the organ of state to ‘act’ against a
‘detected’ misrepresentation “the
existence of
conclusive evidence of fraudulent misrepresentation that should
trigger responsive action from an organ of state.
It is the awareness
of information which, if verified through proper investigation, could
potentially expose a fraudulent scheme”
[17]
.
COSTS:
[34]
It is trite that the costs are in the realm of the court’s
judicial discretion, following the
cause in causa
. Applicant
had to incur great expenses to obtain corrective action.
[35]
had it not been the ‘detected’ casting errors conceded by
the Respondent, Applicant would have acted
much to its detriment with
public fiscus being greatly to be depleted. The word ‘detect’
derives from Regulation 15(1)
of the now repealed Regulations under
the PPP Act of 2000 (the 200 Regulations). My sense of element of
justice dictate that tender
fraud must be countenanced. An
appropriate adverse cost order will serve to deter such malfeasance
in future.
ORDER:
(a) The decision of the
Applicant to award Tender SCMU 15/2018 (“the Mulati Tender”)
and Tender SCMU 21/2018(“The
Codesa Street Tender”)
respectively, to the respondent, is declared unlawful and
constitutionally invalid;
(b) The agreements
concluded between the applicant and the respondent pursuant to the
awarding of the Mulati Tender and Codesa Street
Tender respectively,
are set aside; and
(c) That, it is declared
that the respondent is entitled, notwithstanding the setting aside of
the agreements referred to in (b)
above concluded pursuant to the
awarding of Mulati Tender and Codesa Street Tender in (a) above, to
claim the actual expenses,
excluding any profits that the respondent
actually incurred in executing its obligations in terms of the said
tender. (Mulati Tender
and Codesa Street Tender).
(d) Further that, the
applicant in so far as it has paid the respondent is entitled to
recover from the respondent an amount that
exceed the actual expenses
on either Mulati Tender and the Codesa Street Tender referred to in
(a), above.
(e) Further that, the
respondent s ordered to pay the applicant’s costs on attorney
and client scale, such costs shall include
the costs of two counsel.
MG
PHATUDI
JUDGE
OF THE HIGH COURT
LIMPOPO
DIVISION, POLOKWANE
REPRESENTATIONS:
Counsel
for Plaintiff
:
Adv. NGD Maritz SC
:
Adv. APJ Els
Briefed
by
:
Maloka Attorneys Tzaneen
Attorney
for defendant
:
Adv. MM RIpp SC
Briefed
by
:
Thomas & Swanepoel Inc Tzannen
Date
heard
:
05 November 2020
Date
delivered
:
28 January 2021
[1]
Bengwanyama Minerals v Genoral Resource
2011
(4) SA 113
(CC) at para 187 per Froneman J.
[2]
Act
108 of 1996, as amended
[3]
Full details of the SCM Policy appear in annexure “BS
6
”
to founding affidavit, paginated Index, page 8-12. Annexures “BS
9
”
and “BS
10
”
relate to pricing instructions for both Mulati ans Codesa tenders,
respectively.
[4]
Section 2(1) (f) of Act 5 of 2000. The PPP framework Act, 2000.
[5]
The
Previous Regulations were repealed on 01 April 2017. (i.e. “2011
Regulations”)
[6]
Paginated Index. Page 365 et seq
[7]
Ibid. p467, annexure “A5”, “AA”
[8]
Ibid p469, para 2.5 to 2.6
[9]
Ibid. p366 para; 3.9, “AA”
[10]
2015(5) Sa 245 (CC) para 49
[11]
Act 5 of 2000, as amended
[12]
Section 1 of PPPFA
[13]
2000 (4) SA 413(SCA)
13
A
see, Metro Projects and Another v Klerksdorp Local Municipality
2004(1) SA 16 at para:12
[14]
2014(1) SA 604 (CC) at 626 para:56
[15]
(Case no: 3298/2018) [2019] ZALMPPHC para:49 delivered 04.02.2019
[16]
[17]
Ibid, para,:31