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[2021] ZAGPJHC 138
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Marce Projects (Pty) Ltd and Others v City of Johannesburg Metropolitan and Others (33291/2019) [2021] ZAGPJHC 138 (3 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, JOHANNESBURG)
CASE
NO: 33291/2019
NOT
REPORTABLE
NOT
OF INTEREST TO THER JUDGES
NOT
REVISED
DATE:
3 AUGUST
2021
In
the matter between
MARC
É
PROJECTS
(PTY) LTD
First
Applicant
MARC
É
FIREFIGHTER
TECHNOLOGY (PTY) LTD
Second
Applicant
FIRE
RAIDERS
Third
Applicant
And
CITY
OFJOHANNESBURG METROPOLITAN
First
Respondent
TFM
INDUSTRIES (PTY)
LTD
Second
Respondent
EXECUTIVE
MAYOR OF CITY OF JHB METROPOLITAN
Third
Respondent
JUDGMENT
- APPLICATION FOR LEAVE TO APPEAL
Siwendu
J
[1]
I have carefully considered the argument advanced and the application
for leave to
appeal by the applicant (second respondent
a quo
).
The applicant appeals against paragraphs 7, 8, 9 (b), (c) and (d) and
12 and 13 of the Court’s Order of 29 March 2021,
revised on 12
April 2021. The application proceeded unopposed.
[2]
The applicant takes issues with Court’s
Orders for:
[2.1
The forfeiture of profits, dividends or bonuses
if
any
paid to its shareholders and/ or directors arising from
the invalid contract. [ emphasis added]
[2.2]
The forfeiture of 15% of salary increases paid to it
directors arising from the contract. I refer to the above
two orders
as the disgorgement orders.
[3]
The applicant also takes issues with Court’s Orders for:
[3.1]
An independent verification of information about the payments made
and already disclosed to the Court
in terms of a previous Court Order
dated 2 June 2020; and
[3.2]
The order for the further disclosure and independent verification of
any other profits
and or dividends and bonuses paid to its
shareholders and directors; and
[3.3]
The disclosure of the applicant’s financial statements,
management accounts for the relevant
financial year. I refer to the
orders in paragraphs 3.1 to 3.3 as the disclosure and independent
verification orders.
[4]
Even though the issue was not canvassed at the hearing of the
application for leave
to appeal, the applicant also takes issue and
appeals against the order referring all the affidavits filed on its
behalf and on
behalf of the City for investigation of a charge of
perjury to the National Director of Public Prosecution (NDPP), as
well as the
costs order against it.
[5]
Prior to dealing with the merits of the application, I observe that
the applicant
launched this application on or about 20 April 2021.
Despite confirming that it abides by the Court Orders for the
delivery of
the vehicle units already paid for by the City as well as
the order for the applicant to file an affidavit and table a report
by
an independent auditor, confirming the delivery and compliance,
the Applicant failed to:
a)
comply with the Court Order.
b)
timeously apprise the Court of its inability to comply; and/ or,
c)
seek a variation of the time frames or apply for the condonation for
the failure.
[6]
Instead, on the day of the hearing of the application on 23 July
2021, the applicant
brought to the Court’s attention an
affidavit by Mr Mhlwana, who is cited as “the CEO designate”
of the applicant.
The affidavit was filed on 22 July 2021 but not
brought to the Court’s attention until the morning of the
hearing. It has
a bearing on the application for leave to appeal. The
nub of the issues in the appeal concern the remedial powers of the
Court
following an order of an invalidity of a tender.
[7]
Mr Mhlawana belatedly advises
that Court that Mr Savage and Mr Else who were Chief Executive
Officer and Chief Financial Officer of the applicant left the employ
of the applicant with effect from 31 March 2021. I pause to
mention
that the orders appealed against substantially affect these erstwhile
officers of the applicant. They oversaw the conclusion
of the
contract with the City and the applicant’s approach to this
litigation. They had filed various affidavits, made certain
averments
in opposition.
[8]
Significantly, Mr Mhlawana claims that the applicant was not able to
purchase part
of the components required to complete the manufacture
of the vehicles because the City owed the applicant monies for
services
rendered in respect of the maintenance and repair contract.
I understand from the papers that the maintenance and repair contract
though linked with the award of the tender to the applicant, is a
separate contract from what is at issue in the appeal.
[9]
Central to the application for review, the Court orders dated 2 June
2020 and 29 March
2021 (as varied) are undisputed upfront payments
made by the City to the applicant for the units of vehicles. On the
papers, the
pre payments for the manufacture of the units of vehicles
were made separately from the maintenance and repair contract.
[10]
In addition to the above, the Court had expressed concerns about a
dissipation of public funds
paid over upfront to the applicant
throughout. The applicant and the City failed to perform and or
enforce the contractual terms
pertaining to the presentation of the
performance guaranteed for the contract. The attempt by the Court to
address the issue in
the order dated 2 June 2020 was thwarted by yet
another application for leave to appeal by the applicant.
[11]
The main issue raised by Mr Budlender SC in the appeal concerns the
appropriateness
of the disgorgement orders and the parameters
for granting them. I agree with Mr Budlender SC, that the question
has significant
public procurement law implications. I also agree
that on the face of it, those aspects of the order are crafted in
final terms
and or language. I also agree that the legal frame work
for doing so is not clearly defined.
[12]
Nevertheless, the disgorgement orders must be read holistically in
the context of the commercial
exigencies, the approach by the
applicant, and the power conferred on the court to creatively craft a
remedial remedy. These
disgorgement orders are linked
inextricably with the Court orders for the full disclosure and
independent verification of the gains
if any as well as the orders
for the delivery of the vehicles. The applicant has failed to comply
even with those aspects of the
orders it purportedly agrees with.
[13]
Whether a Court of first instance, confronted with practical
considerations and its assessment
of particular risks in the
litigation is bound to follow the sequence and approach by the
Constitutional Court in
All Pay
also arose during argument
.
I am of the view that the sequence in
All Pay
does
not confine or bind the discretion of a Court of first instance.
[14]
By virtue of the sequence deliberately chosen by the Court, the
applicant was invited to demonstrate
that it is indeed
bona fide
and that the disclosures it had already made following the order of 2
June 2020 were independently verifiable. In addition, the
applicant
was invited to voluntarily make any further and additional
disclosures of the gains and to confirm these by a presenting
Audited
Financial Statements and Management Accounts to the court. It is the
Court’s view that by failing to do so, and by
this appeal, the
applicant declines accountability placed on it. It declines the
requisite scrutiny by the court.
[15]
Implicit in the order for the delivery of the vehicles, as well as
the disclosure, independent
verification and reporting orders is that
the Court retained an ongoing supervisory role over the compliance
with its Court Order
both by the applicant and the City. Full
accounting to it was to be made within 5 days after compliance,
almost contemporaneously,
for the Court to consider the veracity of
the audited financial reports and determine the next steps once all
the information was
placed before it.
[16]
I am of the view that the applicant cannot cherry pick aspects of the
Court Order it does not
like. The Court Order must be considered as a
whole. Full financial disclosure is an inherent part of the remedial
relief.
[17]
Given that the applicant declines the full financial disclosure, has
not complied with the court
order, the
appropriateness
of the
disgorgement cannot be determined. The question cannot be
determined as an academic exercise and/or in the air.
[18]
For these reasons, I decline the application for leave to appeal.
Accordingly,
I make the following order
:
a.
The application for
Leave to Appeal is dismissed;
b.
The applicant is
directed to comply with the Court Order and to present the requisite
information for the further direction and
conduct of the matter.
T
SIWENDU
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
This
judgment was handed down electronically by circulation to the
parties’ and/or parties’ representatives by email
and by
being uploaded to CaseLines. The date and the time for the hand-down
is deemed to be 10h00 on 3 August 2021
Date
of hearing:
23 July 2021
Date
of judgment:
3 August 2021
Appearances:
Counsel
for the Applicant/
Second
Respondent a quo:
Mr Steven
Budlender SC, withhim Mr Louis Hollander
Attorneys
for the Applicant/
Thomson Wilks
Inc
Second
Respondent a quo