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[2021] ZAGPPHC 44
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New Dawn Technologies (Pty) Ltd and Another v Minister of Home Affairs and Another (12174/2008; 26441/2010) [2021] ZAGPPHC 44 (27 January 2021)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE: NO.
(2) OF
INTEREST TO OTHER JUDGES: NO.
(3) REVISED.
DATE
27
JANUARY 2021
CASE
NO: 12174/2008 & 26441/2010
In
the matter between:
NEW
DAWN TECHNOLOGIES (PTY) LTD
First
Plaintiff
VALOR
IT CC
Second
Plaintiff
and
MINISTER
OF HOME AFFAIRS
First
Defendant
STATE
INFORMATION TECHNOLOGY
AGENCY
Second
Defendant
J
U D G M E N T (Leave to Appeal)
This
matter has been heard in terms of the Directives of the Judge
President of this Division dated
25
March 2020, 24 April 2020 and 11 May
2020.
The judgment and order are accordingly published and distributed
electronically.
DAVIS, J
[1]
Introduction
1.1
The applicants (New
Dawn and Valor IT) in the applications for leave to appeal were the
plaintiffs in two consolidated actions against
the Department of Home
Affairs (DHA) and the State Information Technology Agency (SITA), who
are the current respondents.
1.2
Both New Dawn and Valor
IT had been unsuccessful in their claims that agreements had come
into being between them and the DHA regarding
certain portions of an
Electronic Document Management System (EDMS) in respect of which a
request for bids (RFB 458) had been made
in 2005 with closing date 31
January 2006. The tender in respect of the EDMS was for a 3
year project, which period has long
ago expired without the EDMS ever
being implemented.
1.3
On 26 November 2020,
this court found that no award which complies with the statutory
prescripts and the terms contained in the
bid documents had been made
to either of the applicants. Accordingly, no binding agreement
came into being between the parties.
New Dawn and Valor It now
seek leave to appeal these findings.
[2]
The statutory
prescripts and the lack of compliance therewith
2.1
Regulation 14 of the
“SITA Regulations” headed “AWARD OF BIDS”,
deals with this aspect (the full reference
of the Regulations, appear
from the initial judgment).
2.2
Regulation 14.1 reads
as follows: “
Upon
receipt of the recommendation … from the Recommendation
Committee, the relevant accounting authority must make the final
decision on the award of the bid to one or more bidders, as the case
may be
”.
There is no dispute that this is one of the relevant legislative
prescripts.
2.3
The Recommendation
Committee referred to is that of SITA and the accounting authority is
the Director General (DG) of the DHA.
This much is clear from
the papers and from the binding authority in
SAAB
Grintek Defence (Pty) Ltd v South African Police Service
2016 JDR 1316 (SCA), specifically at paragraphs [10] and [11] as
referred to in the initial judgment.
2.4
On 11 June 2006 the
Recommendation Committee of SITA recommended to the DG of the DHA
that the scanning, indexing and storage components
of the EDMS
project be awarded to New Dawn, on certain conditions. On 26
June 2006 the DG accepted these recommendations
in the following
terms, without making reference to the Recommendation Committee’s
conditions:
“
The Department has received
your letter dated 11 June 2006 in the abovementioned tender and
accepts your recommendation. The
Department approves the award
of the Scanning, Indexing and Quality to New Dawn Technologies at a
cost of … 12.11 cents
per page including VAT. Volumes to
be scanned and the roll-out plan will be discussed and agreed upon
during finalization
of the contract. The storage component
should also be awarded to New Dawn Technologies as recommended by the
Recommendation
Committee subject to price negotiation and the
roll-out plan. … The Department
is still awaiting
the final recommendation for workflow and hopes for
a speedy response in this regard”
.
2.5
One of the
Recommendation Committee’s conditions was that “
Funds
be available for the execution of the different phases within the
next three years
”.
2.6
On 4 July 2016 the
Recommendation Committee recommended to the DG of the DHA that the
workflow component of the project be awarded
to Valor IT. There
is no response from the DG on record regarding this recommendation,
nor evidence of a decision taken at
the time in respect of it.
2.7
On 25 August 2006 Ms
Sekhu, a veteran employee of the DHA, drafted and presented a
memorandum to the DG of the DHA. The purpose
of the memorandum,
as expressly stated therein, was to recommend that the DG signs
“letters of award” to New Dawn and
Valor IT.
2.8
Based on reservations
expressed by the DHA’s Chief Financial Officer regarding the
financial implications and availability
of funds, the “letters
of award” were, on all available evidence, never signed nor
sent.
2.9
Regulation 14.6 of the
SITA Regulations prescribe that “
the
accounting authority of the department …
must
in writing notify
the Agency
and
the successful bidder or bidders
of the award of the bid
”.
(my underlining)
2.10
In the initial
judgment, it was found, based on the letter of 21 June 2006, that
Regulation 14.1 has been complied with by the DG
as accounting
authority in respect of New Dawn. Based on the facts set out in
paragraph 2.8 above, it was found that the
requirements of Regulation
14.6 had not been complied with.
2.11
Regarding Valor IT, it
has been found that neither Regulation 14.1 nor Regulation 14.6 have
been complied with in relation to the
portion of the project for
which it was recommended by the Recommendation Committee.
2.12
Furthermore, the RFB
documents, constituting the terms on which the plaintiffs had
responded to the request for bids (RFB), prescribed
that “
every
acceptance of a bid shall be posted to the supplier concerned by
registered or certified mail …
”
and “
mere
offer and acceptance shall not constitute a formal a contract of any
nature …
”.
2.13
Based on the above,
this court also found (in paragraph 6.10 of the initial judgment)
that the agreed formalities of the bids or
bid documents regarding
acceptance or the making of an award, had not been complied with.
This pertains to both New Dawn
and Valor IT.
2.14
Based on all of the
aforesaid and the fact that the underlying facts were undisputed,
this court came to the conclusions mentioned
in paragraph 6.13 of the
initial judgment, namely:
-
the letter by the DG
to SITA dated 21 June 20006 did not comply with the formalities
stipulated for the award of the tender in the
bid documents or
prescribed by the legislative framework, in particular SITA Reg 14.6;
-
the aforesaid letter
by the DG was not an award or “acceptance letter”
directed to New Dawn and was not a letter as
contemplated in
paragraphs 2.12, 2.16 and 2.26 above;
-
the proposed award
letter to New Dawn was forestalled by the CFO’s comments
appended to Ms Sekhu’s memo dated 25 August
2006;
-
the publications on
either SITA’s website and in the Government Tender Bulletin or
any other website, can be no more than
an erroneous or premature
compliance by SITA with its obligations contemplated in Reg. 14.7,
but cannot, either in fact or in law,
be elevated to a decision or an
actual award itself;
-
the DG never
accepted the RC recommendation regarding Valor and no award letter
was ever issued to it;
-
there was therefore
never any valid award made to either New Dawn or Valor.
-
the extended bid
validity periods (and the envisioned contract period) have by now
expired and no valid award can be made
.
2.15
Against this
background, is must now be considered whether the applicants have
crossed the jurisdictional hurdle of
section 17(1)
of the
Superior
Courts Act 10 of 2013
and whether an appeal would have a reasonable
prospect of success.
[3]
Reasonable prospect
of success on appeal?
3.1
On behalf of New Dawn
it was submitted that this court has misdirected itself by
“conflating” the two “
related
but separate juridical acts regarding the decision to award, which is
made in terms of SITA Regulation 14(1) and also compliance
with the
requirement to notify the successful bidder, which is made on terms
of SITA Regulation 14(6)
”.
3.2
From what has been
stated in paragraph 2 above, it is clear that the mere decision by
the DG, whether in his mind (only), in his
office or even expressed,
by itself does not constitute the actual making of an award until
concretisised in an “award letter”.
Regulation
14(6) is couched in peremptory terms and a similar requirement has
furthermore been agreed to by the parties.
The issue is not one
of alleged “conflation”, the issue is that both
requirements have to be fulfilled for an award
to have been validly
made.
3.3
I find no reasonable
prospect of success that another court would on appeal find that the
mere decision of an accounting officer
to accept the recommendation
of a Recommendation Committee would in itself constitute a binding
contract (as the applicants allege)
without there being compliance
with the statutory prescripts or the terms of acceptance. I
furthermore find it inconceivable
that, despite objections by a Chief
Financial Officer, raised in accordance with his obligations and the
conditions imposed by
the Recommendation Committee, a court would
find that a valid award had been made by the mere acceptance of the
recommendation
of the identification of a successful bidder, without
going through the processes prescribed in procurement legislation.
Such a finding would in any event be contrary to the supply chain
management circulars issued by National Treasury in terms of Section
76(4)(c) of the PFMA (as referred to in paragraph 3.5 of the initial
judgment) and I foresee no reasonable prospect that any of
this would
happen on appeal.
3.4
Valor IT’s
position is even more tenuous: it does not even have the benefit of a
“decision” or proof of acceptance
of the Recommendation
Committee’s recommendation in its favour, let alone any
compliance with the prescripts referred to
above.
3.5
The numerous peripheral
issues relating to budgets, portfolio committee meetings and
presentations and subsequent events do not
detract from the
abovementioned issues which were central to the applicants’
claims. Once there has been a failure
to make a valid award,
all the other issues become irrelevant.
[4]
Conclusion
I find that there is no reasonable prospect of success
on appeal in relation to the findings made on both the applicants’
claims.
[5]
Order
The applications for leave to appeal are refused with
costs, including the costs of multiple counsel as well as senior
counsel,
where so employed.
N
DAVIS
Judge
of the High Court
Gauteng
Division, Pretoria
Date of
Hearing: 21 January 2021
Judgment
delivered: 27 January 2021
APPEARANCES:
For
the First Applicant:
Adv L.H Lekalakala
Attorney for the
First Applicant:
Ngcingwana Inc, Pretoria
For the Second
Applicant:
Adv P.W
Makhambeni
Attorney for the
Second Applicant:
Noko Ramaboya Mason
Attorneys,
Pretoria
For the Respondents
in case no: 12174/2008: Adv. C.E Puckrin SC together with Adv H.C
Jansen van Rensburg
For
the Respondents in case no: 26441/2010: Adv. J Hershensohn, together
with
Adv P
Nyapholi-Motsie
Attorney for
Respondents:
Makhubela
Attorneys, Pretoria