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[2021] ZAGPJHC 146
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Gibb (Pty) Ltd v Passenger Rail Agency of South Africa and Another (35870/2021) [2021] ZAGPJHC 146 (26 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
DATE:
26 August 2021
Case No: 35870/2021
In
the matter between:
GIBB
(PTY)
LTD
Applicant
and
PASSENGER
RAIL AGENCY OF SOUTH AFRICA
First Respondent
GLAD
AFRICA GROUP (PTY) LTD
Second Respondent
JUDGMENT
WILSON
AJ
:
1
The applicant (“Gibb”)
seeks interim relief restraining the implementation of two tenders
for professional consulting
work on rolling stock depots at Salt
River and Springfield. The work was put out to tender by the first
respondent (“PRASA”),
and was eventually awarded to the
second respondent (Glad Africa”). Gibb claims that the tender
process was vitiated by reviewable
irregularities which resulted in
Gibb’s unlawful disqualification. Gibb seeks to suspend the
work while it tries to demonstrate
this by way of review under the
Promotion of Administrative Justice Act 3 of 2000 (“PAJA”).
2
The requirements for interim relief
pending review are well-known. Gibb must persuade me that it has a
prima facie
right to the relief it seeks in Part B. There is room for me to
entertain some, but not “serious”, doubt about that
right, while still granting the relief (
Webster
v Mitchell
1948 (1) SA 1186
(W) at
1189). Gibb must have suffered, or reasonably apprehend, irreparable
harm if the interim relief is not granted, and it must
have no
effective remedy other than an interim interdict to prevent or
ameliorate that harm.
3
Finally, the balance of convenience
must favour the grant of an interim interdict. It has long been held
that the stronger the
prima facie
right, the less the balance of convenience need tilt in the
applicant’s favour. In other words, a relatively weak
prima
facie
right may be compensated for by a
balance of convenience firmly in the applicant’s favour, and a
very strong
prima facie
right can make up for a balance of convenience adverse to the
applicant. This is little more than common sense. Apparently weighty
cases in the main claim ought to be heard out even if it puts the
opposing parties to a great deal of trouble. Even weak but still
arguable cases ought nonetheless to be entertained if they cause
relatively little trouble to those who have to defend them (
Eriksen
Motors (Welkom) Ltd v Protea Motors Warrenton
1973
(3) SA 685
(A) at 691E-G).
4
Where an interim interdict is sought
in restraint of the exercise of statutory powers by an organ of
state, the balance of convenience
inquiry takes on a slightly
different character. In that instance, a court is bound to weigh what
has been called “separation
of powers harm”. Weighing
this harm involves recognising the need to allow the state to
continue to exercise its powers and
functions, unless “the
clearest of cases” has been made out that they are based on an
illegality (
National Treasury v
Opposition to Urban Tolling Alliance
2012 (6) SA 223
(CC) (“
National
Treasury”)
at paragraph 47).
5
In this matter, there is little
doubt in my mind that Gibb has demonstrated that it reasonably
apprehends irreparable harm if the
tender is implemented. It also
lacks any realistic remedial alternative to an interim interdict.
Although there was some argument
from Mr. Mathipa, who appeared
together with Mr. Mosikili for PRASA, that a demonstrably unlawful
tender process might allow Gibb
to claim damages in the ordinary
course, the damages then claimable are highly unlikely to provide a
surrogate for actually winning
the tender after a fair process, which
is presumably what Gibb seeks to achieve in this application and the
review to follow (see,
in this respect,
Olitzki
Property Holdings v State Tender Board
2001 (3) SA 1247
(SCA) at paragraphs 31 and 42).
6
This case turns, then, on the
strength of Gibb’s
prima facie
right to the relief it claims, and whether that right can overcome
any prejudice to PRASA the interim relief might cause, including
any
“separation of powers harm”.
7
If there were apparent
irregularities in the tender process, and if those apparent
irregularities would, once established, amount
to grounds of review
under PAJA, then it can, in my view, be accepted that Gibb has
established a
prima facie
right of some strength (
Allpay
Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer,
South African Social Security Agency
2014 (1) SA 604
(CC) (“
Allpay
”)
at paragraph 44). It is, accordingly, to the irregularities Gibb
alleges that I now turn.
The
irregularities alleged in the tender process
8
Mr. Moultrie, who appeared together
with Mr. Scott for Gibb, staked his case on three alleged
irregularities. The first involved
the role of reference letters in
the assessment of the bids received as part of the tender process.
The second involved the extent
to which Gibb could be said to have
delivered a project methodology for the implementation of the work
that was generic, rather
than addressed to PRASA’s specific
needs at Salt River and Springfield. The third concerned whether the
apparent substitution
of Deutsche Bahn engineers with other engineers
in Glad Africa’s bid ought properly to have precluded the award
of the work
to Glad Africa.
The
reference letters
9
PRASA required all those who bid for
the work to show the organisational experience necessary to take it
on. This was demonstrable,
so the invitation to tender said, by
delivering reference letters from entities for whom the bidders had
previously worked which
contained the amount, type and value of the
work done for those entities. There is no dispute that the reference
letters Gibb submitted
did not contain all of this information. Some
contained none of it at all. But it is equally common cause that the
information
required to be in the letters was clearly discernible
from elsewhere in Gibb’s bid. Gibb’s bid was penalised
with a
fairly low score because the information did not appear in the
reference letters themselves.
10
Mr. Moultrie argued (and there was
no submission to the contrary) that Gibb would likely have received a
high score had the reference
letters been read together with material
in the bid which amply demonstrated Gibb’s organisational
experience to the required
standard. PRASA’s failure to do just
that was, Mr. Moultrie argued, irrational.
11
Mr. Mathipa met this case with the
rejoinder that the invitation to tender said what it said. PRASA
asked for the reference letters
to contain information that that was
not present in Gibb’s reference letters. PRASA could not, he
submitted, be expected
to go hunting for it elsewhere.
12
There is some attraction to this
argument, but I think that attraction is superficial. If PRASA was
required to go hunting, it did
not, by all accounts, have to go very
far. It could have gleaned the information required by reading Gibbs’
bid as a whole.
The question is whether it was required to do that. I
think that it is at least arguable that it was.
13
Section 2 of the Preferential Public
Procurement Framework Act 5 of 2000 (“the Procurement Act”)
requires that the tenders
be evaluated according to a scoring system
which has regard to price, empowerment criteria, and the need to
implement the Reconstruction
and Development Programme, unless other
“objective criteria” justify the award to the successful
tenderer. In this
case, the criterion of organisational experience
was one of these other “objective criteria” specified in
the invitation
to tender, according to which the tenderers’
“functionality” should be assessed. The Preferential
Procurement
Policy Framework Regulations, 2017 (“the
Regulations”), which apply to the award of the tenders, define
“functionality”
as “the ability of a tenderer to
provide goods or services in accordance with specifications as set
out in the tender documents”.
14
The reference letters were intended
to assist PRASA to score Gibb on its functionality, one aspect of
which was its organisational
experience. It seems to me that PRASA
might have unduly fettered itself when making its assessment. What it
was required to do
was assess Gibb’s organisational experience,
not Gibb’s capacity to follow the invitation to bid to the
letter. If
PRASA blinded itself to the bigger question of
functionality, by an over-fastidious approach to the form of the
reference letters
submitted, it seems to me that its decision may
have lost contact with the empowering provisions it was meant to
enforce: the Regulations,
section 2 of the Procurement Act, and
section 217 of the Constitution, 1996, to which the Regulations and
the Procurement Act give
effect. In that event, the grounds of review
set out in sections 6 (e) (i) and (iii) may well be made out. At
least some of the
grounds enumerated in 6 (f) (ii) may also be
established.
15
It is, of course, not necessary to
reach any definitive conclusions in this respect. It nonetheless
seems to me that Gibb has sketched
out a case of this nature, and
that, at present, that case stands uncontradicted. There was some
suggestion in argument that strict
compliance with the reference
letter requirements was necessary to ensure that the information
contained in them came from a source
other than the bidder, but that
seems to me to be a point to be considered in the substantive review
application. It does not,
in itself, answer the charge that PRASA
evaluated Gibb’s bid with an unlawfully narrow vision.
The
project methodology document and the role of Deutsche Bahn
16
PRASA’s evaluators also took a
dim view of Gibb’s project methodology, which was said to be
“generic and not aligned
properly with the scope of work in
each case”. Owing to the commercial sensitivity of its
contents, PRASA did not produce
the full methodology document in its
papers before me. I was taken instead to a list of its contents,
which, on their face, seemed
tailored to PRASA’s scope of work.
17
There was also no dispute at all
that Deutsche Bahn engineers, originally punted as an attractive
feature of Glad Africa’s
bid, appeared to have dropped out at
some unspecified stage. Mr. Mathipa submitted that this did not
affect the validity of the
award of the tender, but may have
contractual consequences if the Deutsche Bahn engineers do not
materialise at a later stage.
18
I am not sure that is correct. There
is some force in Mr. Moultrie’s argument that, if the work was
awarded and the contract
signed on a representation that Deutsche
Bahn’s experience or expertise would be brought to bear on the
work, which then
turned out to be inaccurate, then the contract might
well have been unlawfully awarded and signed.
19
On the view I take of this case,
however, it is not necessary for me to embark upon a more detailed
examination of these grounds.
Gibb has already established what is,
on its face, a material irregularity in the way its organisational
experience was assessed.
No doubt – serious or otherwise –
has been thrown on its case as it is currently presented, although
there may be an
answer in due course as the papers mature.
20
It is not clear to me whether the
absence of that irregularity would have prevented Gibb’s
disqualification. It is, however,
plain from the decision in
Allpay
that the materiality of an irregularity is not determined by whether
it would have led the tender process to a different outcome.
The test
is whether a ground of review under PAJA has been established on its
own terms (see
Allpay
,
para 23). I am satisfied that Gibb has established a
prima
facie
right to the relief it seeks in
Part B in that sense.
The
balance of convenience
21
Much was made in Gibb’s
argument of how much more expensive Glad Africa’s bid is than
Gibb’s own. This was said
to be relevant to the balance of
convenience. The sheer expense of the successful bid does raise an
eyebrow (at least R346 million
over the odds, by Mr. Moultrie’s
reckoning). But I do not think that I can say that there is no or
little inconvenience to
PRASA in suspending the implementation of the
work because that might turn out to save PRASA money.
22
A better practical argument for the
proposition that the balance of convenience favours Gibb is that I
was given no reason why a
suspension of the work at a relatively
early stage would cause PRASA or the public at large any great
upheaval. The progress of
the tenders, which were initiated in late
November 2018, has been fairly leisurely to date. Gibb was finally
notified of the outcome
of the process on 25 June 2021. I accept, as
Mr. Mathipa submitted, that the COVID-19 restrictions might, to some
extent, have
slowed the tender process down through no fault of
PRASA. But that is not the same as saying that there is some looming
future
inconvenience or harm to which I should have regard. I do not
mean to suggest that PRASA would not be inconvenienced at all by the
suspension of the work. I accept that depot modernisation is, as Mr.
Mathipa and Mr. Mosikili submitted in their heads of argument,
“a
very important national project”. But projects undertaken by
the state are all presumptively very important to some
extent. That
does not in itself mean that they may not be interrupted if they may
have been unlawfully advanced. More specificity
was required from
PRASA in this respect. None was given.
23
For its part, Glad Africa did not
oppose the grant of interim relief. While not dispositive of the
balance of convenience, that,
too, is a fairly strong indication that
the scales tip towards Gibb.
24
Over and above this, I am acutely
aware of the need to respect PRASA’s freedom of movement within
the sphere of power it exercises.
That is the definitional
requirement of the separation of powers. But it is precisely because
I am satisfied that there is a
prima
facie
case to answer that PRASA has
exceeded those powers, by operating an unlawful tender process, that
any “separation of powers
harm” is more apparent than
real in this case.
25
The concept of “separation of
powers harm” as deployed in the
National
Treasury
case was aimed at something
different. In that matter the Opposition to Urban Tolling Alliance
had made a number of policy-based
arguments that went, at best, to
the proposition that the state, in the exercise of powers everybody
accepted it had, failed to
weigh a number of social considerations
properly. This case is on a different footing. The allegation is that
PRASA has failed
to give effect to section 2 of the Procurement Act.
If that allegation turns out to be right, then any separation of
powers concern
will evaporate, because it will have been established
that PRASA has exercised a power it does not have. There can be no
objection
based on the separation of powers, if the separate powers
being exercised are not really powers at all.
26
A substantial, and largely
unanswered, claim that PRASA has failed to give effect to material
features of the controlling legislation
is, it seems to me, clear
enough to take this case into the category of the “clearest of
cases” identified in the
National
Treasury
decision.
Order
27
It follows that Gibb has made out a
case for interim relief. Gibb did not seek costs against Glad Africa
in the event that it was
successful. There was no suggestion that
costs should not follow that result in respect of PRASA. There was an
unopposed application
to substitute Glad Africa for what is
apparently one of its subsidiary entities. It is formal and
uncontroversial. It is granted.
On the draft order I was given, that
substitution appears to extend to the citation of Glad Africa in
Gibb’s founding affidavit.
Since a founding affidavit is not a
pleading that requires formally amending, that part of the relief is
not competent. I will
nonetheless record Glad Africa’s full
citation in my order.
28
I make the following order –
28.1
The forms and service provided for in the
Rules of Court are dispensed with and the matter is heard as one of
urgency in terms of
Rule 6 (12).
28.2
The second respondent is substituted with
GLAD AFRICA CONSULTING ENGINEERS (PTY)
LTD
(“Glad Africa”), a
private company duly incorporated under the laws of the Republic of
South Africa and having its
principal place of business at Hertford
Office Park, Block G, 2
nd
& 3
rd
Floor, 90 Bekker Road, Midrand, South Africa.
28.3
The first and second respondents are
interdicted and restrained, pending the final determination of the
relief sought in Part B
of this application, from taking any steps to
implement:
28.3.1
the first respondent’s decision to
award the tender advertised under RFP no. HO/PT/DM/141/12/2018
concerning, amongst other
things, the appointment of a
multidisciplinary consulting engineering company to render
professional engineering services (stages
3 to 6) for the upgrading
of the Salt River Rolling Stock Depot; and
28.3.2
the first respondent’s decision to
award the tender advertised under RFP no. HO/PT/DM/140/12/2018
concerning, amongst other
things, the appointment of a
multi-disciplinary consulting engineering company to render
professional engineering services (stages
3 to 6) for the upgrading
of the Springfield Rolling Stock Depot.
28.4
The parties shall forthwith approach the
office of the Acting Deputy Judge President for the expedited case
management and hearing
of Part B.
28.5
The applicant’s costs in Part A of
this application, including the costs of two counsel, shall be paid
by the first respondent.
28.6
The determination of the second
respondent’s costs in Part A is reserved pending the
determination of Part B of this application.
S
D J WILSON
Acting
Judge of the High Court
This
judgment was prepared and authored by Acting Judge Wilson. It is
handed down electronically by circulation to the parties or
their
legal representatives by email and by uploading it to the electronic
file of this matter on Caselines. The date for hand-down
is deemed to
be 26 August 2021.
HEARD
ON:
18 August 2021
DECIDED
ON:
26 August 2021
For
the Applicant:
R Moultrie SC
T
Scott
.
Instructed by Mkhabela Huntley Attorneys Inc
For
the First Respondent:
MK Mathipa
T
Mosikili
Instructed
by Lucky Thekisho Attorneys Inc
For
the Second Respondent
A Bham SC
J
Mitchell
Instructed
by Schindlers Attorneys