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[2019] ZAGPPHC 958
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City of Tshwane Metropolitan Municipality v Altech Radio Holdings (Pty) Limited and Others (58305/2017) [2019] ZAGPPHC 958; [2020] 1 All SA 99 (GP) (16 July 2019)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DlVISION, PRETORIA)
(1)
REPORTABLE:
YES/
NO
(2)
OF
INTEREST TO OTHER JUDGES: YES/
NO
(3)
REVISED
CASE
NO: 58305/2017
16/7/2019
In
the matter between:
CITY
OF TSHWANE METROPOLITAN MUNICIPALITY
Applicant
and
ALTECH
RADIO HOLDINGS (PTY) LIMITED
First Respondent
THOBELA
TELECOMS (RF) PROPRIETY LIMITED
Second Respondent
ABSA
BANK
LIMITED
Third Respondent
THE
CHAIRMAN OF THE MUNICIPAL COUNCIL OF
THE
CITY OF TSHWANE
Fourth Respondent
NEOTEL
(PTY)
LIMITED
Fifth Respondent
COMMUNICATIONS
SOLUTIONS (PTY) LIMTED
Sixth Respondent
MOBILE
TELEPHONE NETWORKS (PTY) LIMITED
Seventh Respondent
BRIGHTWAVE
TECHNOLOGIES (PTY) LIMITED
Eighth Respondent
CITICONNECT
BUSINESS SOLUTIONS (PTY) LIMITED
Ninth Respondent
EOH
MTHOMBO (PTY) LIMITED
Tenth Respondent
BYTES
TECHNOLOGY GROUP SA (PTY) LIMITED
Eleventh Respondent
JUDGMENT
Baqwa J
1
This
is an application for review like no other. Whilst the review of own
decisions by administrative entities are legion, the uniqueness
of
this application arises from the change of administration of the
applicant from one political party, the African National Congress
(ANC) to the Democratic Alliance (DA). It seeks to review and set
aside a decision of the applicant ("the COT") in which
the
broadband network tender was awarded to the first respondent ("ARH")
and to have the subsequent contracts set aside.
2
The
decision to award the tender was taken on 9 June 2015 and the review
application was launched on 22 August 2017.
Facts
3
In
2013 the COT had an existing network infrastructure of approximately
500 kilometres of fibre. This infrastructure had been utilised
by the
COT to deliver key governmental services which included security,
education, traffic, tourism, internet connectivity and
access to
information.
4
The
COT had an interest in upgrading its communications network
infrastructure and in 2013, it decided to expand and improve same.
The COT envisaged a "SmartCity" aimed at combining
technologies and targeting both business nodes as well as
historically
disadvantaged residential areas. Central to this
objective was the improvement of service delivery.
5
Consequently,
the COT set out to identify a service provider to build and operate
1500km of network infrastructure, which would
integrate with and
complement its existing network. This gave birth to the COT's
broadband project.
6
The
broadband project was spearheaded by two key individuals, namely, Mr
Jason Ngobeni who at the time was COT's City Manager and
Mr Dumisani
Otumile, the COT's Chief Information Officer. In order to
operationalise the project they needed the approval of the
Mayoral
Committee. This was to ensure that the COT's budget appropriately and
comprehensively accommodated a project of that magnitude.
7
The
Mayoral Committee approved the business case for the broadband
project on 15 May 2013 even though it appeared that scant detail
was
provided on the funding side.
8
The Mayoral Committee resolved in broad
terms that the COT would not fund the rollout of the broadband
infrastructure directly and
that it would instead commit to an
"off-take amount" to make the business model viable. The
"off-take" amount
would be a guaranteed minimum yearly
amount paid over to the successful tenderer. It envisaged the amount
which was to be originally
expended would be R320 million per annum,
however it later emerged that R276 515 898 was to come from the COT's
operational expenditure
budget and its existing budget for the
expansion of the ICT network. That budget as it turned out would
however be insufficient
as it would result in a shortfall of
approximately R93 million per annum which would be paid from the
2015/2016 financial year.
This meant that the shortfall was not
accommodated by the existing budget allocations. The Mayoral
Committee resolved however that
the COT consider the shortfall
through budget prioritization. Budget prioritization is a process
through which funds are redirected
from other departments on the
basis that those departments are not likely to exhaust the budgets
allocated to them for the current
year.
The Law
9
Section
217 of the Constitution provides that when any sphere of government
"contracts for goods or services, it must do so
in accordance
with a system which is fair, equitable, transparent, competitive and
cost-effective." These constitute the minimum
requirements for a
valid tender process and contracts entered into following an award of
a tender to a successful bidder.
[1]
10
It
is thus a prescript that is enshrined in the Constitution that any
procurement process preserves
"
the attributes of fairness, or in the local government sphere, the
attributes of transparency, competitiveness and cost-effectiveness."
11
Equally,
a constitutionally-compliant process ought to uphold the values that
govern public administration as articulated in section
195 of the
Constitution which include fairness, equitabiltiy, efficient,
effective and economic use of resources; accountability;
and
transparency.
[2]
12
There
is threefold purpose in the context of tenders which compels the
state to comply with "process formalities." These
are:
12.1
Firstly,
this ensures fairness to the participants in the bid process.
12.2
Secondly,
it enhances the likelihood that the outcome of the tender is
efficient and optimal.
12.3
Third,
it guards against a "process skewed by corrupt influences."
[3]
13
For
the purposes of determining whether non-compliance with legal
requirements vitiates the lawfulness of a decision, a Court must
assess the materiality of the non-compliance and in doing so, it must
consider the purpose of the provision of the requirement.
In this
regard the Constitutional Court stated as follows in the AIIPay
merits :
" Assessing the materiality of
compliance with legal requirements in our administrative law is,
fortunately, an exercise unencumbered
by excessive formality. It was
not always so. Formal distinctions were drawn between "mandatory''
or "peremptory'' provisions
on the one hand and "directory"
ones on the other, the former needing strict compliance on pain of
non-validity, and
the latter only substantial compliance. That strict
mechanical approach
has
been
discarded. Although
a
number
of factors need to be considered in this kind of enquiry, the central
element
is
to
link the question of compliance to the purpose of the provision.
[4]
14
It
bears noting however that, even though the decision to award a tender
constitutes administrative action, only a private person
and not the
state is entitled to pursue a judicial review remedy of its own
decision in terms of PAJA.
[5]
15
When
the COT commenced with these proceedings the legal position was that
it was possible for organs of state reviewing their own
decisions to
proceed by way of PAJA or the principle of legality. However, the
Gijima
decision
has altered this position.
16
In
Gijima
the
Constitutional Court declared SITA's decision to appoint a service
provider under a contract to be constitutionally invalid.
The
initiative to review the decision had come from SITA itself even
though it was the decision maker. Whilst the Supreme Court
of Appeal
had found that an organ of state could invoke PAJA, a unanimous
judgment by Madlanga J and Pretorius AJ rejected that
contention. It
found instead that because the State is not a bearer of rights, it
cannot avail itself of the right to administrative
justice
safeguarded in section 33 of the Constitution, or of PAJA, which is
the legislation enacted to give effect to that right.
The Court
articulated itself per Madlanga J and Pretorius AJ as follows:
"Does PAJA apply?
[18] The answer to this question must surely
tum on an interpretation of the Constitution and PAJA. In this
regard, the most relevant
section of the Constitution is s 33. Before
we engage in an interpretation of the Constitution and PAJA, we think
it necessary
to consider the philosophical underpinnings of the very
notion of whom fundamental rights are meant to protect. It is quite
axiomatic
-
it
seems to us
-
that
fundamental rights are meant to protect warm bodied human beings
primarily against the State. Why this discussion then?
We think it
will help inform the interpretative exercise on whether PAJA applies
when organs of state seek the review of their
own decisions.”
[6]
17
The
above re-statement of the law does not however, mean that an organ of
state is deprived of its ability to seek its own decisions
to be set
aside. The state can and ought to do so on the basis of rationality
or legality. Conduct which is deemed to be unlawful
ought to be
corrected. That is the essence of the principle of legality.
Government officials occupy the position of being guardians
of the
public interest and from that perspective they have not only the
power but also the duty to dismantle illegalities. They
must
therefore approach a court to set aside own decisions and this has
been established in a long line of decisions such as
Pepkor
Retirement Fund and another v Financial Services Board and another
[7]
where the Supreme Court of Appeal stated that:
"A
public functionary may be entitled
and even obliged to seek the review by
a
court of its own
decision."
18
The
principle was also confirmed in
Gijima
(supra) at paras 40-41 as follows:
"The principle of legality may thus be
a
vehicle
for its review.
. .
Indeed, we have previously held that the
principle of legality would be
a
means by which an organ of state may
seek the review of its own decision."
19
COT's
case is premised upon its failure to act in accordance with the
principle of legality and that its conduct which was inconsistent
with the applicable legal provisions was unlawful.
Respondent's case
20
The
respondents have taken a stance which challenges the
locus
standi
of COT's city manager who has
deposed to the applicant's (COT) founding affidavit on the basis that
the council did not pass a resolution
to authorise the city manager
to institute the proceedings.
Further they submit that COT is non-suited as a
result of the alleged delay in litigating the matter.
In regard to the irregularities raised by the
COT, they submit that where such exist, they are not material enough
to derail COT
broadband project and the underlying contracts.
Preliminary objections
21
Dr
Moeketsi Emmanuel Mosola deposed to the COT's founding affidavit in
his capacity as the City Manager ("City Manager")
under the
new political administration. In terms of section 60 of the Municipal
Finance Management Act, 2003 ("MFMA")
he is the accounting
officer of the COT and as such he is empowered and obliged to
exercise the functions and powers in terms of
the
MFMA.
These include taking reasonable
steps to ensure that the resources of the municipality are utilised
effectively.
22
In terms of sections 55(2) and 95 of the
Municipal Systems Act
[8]
,
the accounting officer is responsible for the income and expenditure
of the municipaltiy, and compliance with the MFMA. Notwithstanding
these obligations, ARH disputes Dr Mosola's authority despite the
mayoral committee having provided a resolution. They contend
that the
municipal council had not authorised these proceedings further
authorising him to act. Given Dr Mosola's responsibilities
as an
accounting officer, the respondents' objections in this regard can
only be regarded as a classical case of splitting hairs.
23
In
Democratic
Alliance v Masondo N.O. and another
[9]
the Constitutional Court found that while there is no express mention
of a mayoral committee in the Constitution, the Constitution
envisages the possibility of legislation which regulates and provides
further detail on the powers and functions of a municipal
council and
its organs. This objective was achieved through section 60 of Local
Government: Municipal Structures Act
[10]
which then means there is nothing to impede the municipal council
from delegating its powers to initiate litigation to the Executive
Mayor and the mayoral committee.
24
Further, a complex line of delegation is
provided for in the COT's Corporate System of Delegations 2012 ("the
System")
which was approved by the Special Council on 26 January
2012 and reaffirmed on 31 August 2016. The System provides that the
"Executive
Mayor has all residual powers, save those expressly
reserved for the municipal council," and that such powers "must
be
exercised and performed together with the other members of the
mayoral committee."
25
The City Manager is then accordingly
empowered by the Executive Mayor who delegates to him powers such as
25.1
"[t]he
powers in terms of section 62(1) (a) of the [MFMA] to ensure the
effective, efficient and economic use of the Municipality's
resources"
25.2
"[t]he
power to prevent unauthorised, irregular or fruitless and wasteful
expenditure and other losses in terms of section
62 (1) (d) of the
[MFMA]"
25.3
"[t]he
power to depose and/ or sign any affidavits and documents emanating
from any legal matter subject thereto that such
affidavits/ documents
be scrutinised by the Chief Legal Counsel."
26
It would therefore appear from the above
that the challenge regarding the ability of the COT Manager to bring
this application is
not sustainable and that the absence of a
municipal council resolution is of no consequence.
Irregularities
27
The challenge regarding the BOT
Agreement and the Tripartite Agreement is premised on four main
grounds, namely, that:
27.1
The
RFP was defective and its publication irregular;
27.2
The
evaluation of the bids was marred by unlawfulness;
27.3
Mandatory
processes were not complied with subsequent to the award; and
27.4
The
agreements that were concluded pursuant to the tendering process are
unenforceable
These grounds are discussed
seriatim .
The Supply Chain Management ("SCM")
Regulations published under Local Government Municipal Finance
Act
[11]
("MFMA")
28
Regulation
21 (b) stipulates that tender documents must "include evaluation
and adjudication criteria, including any criteria
required by other
applicable legislation." This includes B-BBEE criteria in terms
of the Preferential Procurement Policy Framework
Act
[12]
("PPPFA"). The same requirement is contained in COT's
Procurement Policy which provides that the bid documentation must
include the preference point systems to be utilised as well as
evaluation and adjudication criteria. A statement regarding the
procurement of goods and services outside South Africa had also to be
included.
29
The RFP published by the COT was found
wanting in the following respects
29.1
It
failed to specify that the PPPFA and the Regulations applied to the
extent that the bids would be scored on the basis of an allocation
of
90 points for functionality and 10 points allocated for specific
goals;
29.2 It failed to specify
that the bid evaluation would occur as a staged process and that the
bidders should
indicate whether goods and services would be sourced
locally, within South Africa or not.
30
The
preferential procurement system applies to tenders which exceed one
million rands and ought to have been applied in the COT
tender. The
90/ 10 point system as stipulated in s 2(1) (b) (i) which means that
10 points may be allocated for specific goals
such as BEE and the
remaining 90 points would related to price. This provision of the
PPPFA coincides with the COT Procurement
Policy.
31
Regulation 4 of the PPPFA Regulations
stipulates that where functionality is a component of a tender the
RFP must specify full details
regarding the criteria for measuring
functionality. This was not complied with. As the Western Cape High
Court stated in
Rainbow Civils
CC
v Minister of Transport and Public
Works, Western Cape and others:
[13]
"[T]he imperatives of fairness and
transparency, laid down in section 217(1) of the Constitution,
dictate that prospective
tenderers should be properly informed of the
tender evaluation criteria to be applied. This information is
obviously necessary
to enable would-be bidders to decide whether or
not to spend time and money on preparing
a
tender.
To my mind transparency and fairness require
that tender evaluation methods should be clearly defined, certain and
prescribed in
advance in the tender documentation."
B-BBEE Certificates
32
If a bidder fails to submit original and
valid B-BBEE certificates which are necessary in order to apply the
preferential point
scoring formula, the bidder will be instantly
disqualified. Further, a trust, consortium or registered joint
venture must submit
a B-BBEE status verification certificate for
every separate bid in terms of the COT procurement policy. In the COT
tender, bidders
were put at risk in that they could be disqualified
for failing to submit the correct documentation due to the failure to
make
this requirement explicit in the RFP.
This defect in the RFP ran against the values
of transparency and fairness and thus constituted a material
irregularity.
RFP used to evaluate bids materially
differed from published RFP
33
A further irregularity was that the
published RFP differed in material respects from the RFP which was
used to assess the bids and
to determine the tender award. The
respondents submit that the compulsory briefing session on 26
September 2014 informed the bidders
of the discrepancy between the
published RFP and that no bidders were prejudiced as a result of such
discrepancy.
34
The respondents' submission is however
not sustainable in view of the clearly stated view in the COT
Procurement Policy which is
formulated as follows:
"A briefing session must only be held
to clarify some existing issues in the tender document and no new
issues can be raised
at such a meeting. No material changes can be
made to the scope and no major changes can be made to the
specification at such
a
meeting".
The RFP itself provides a mechanism which could
have been utilised to try and address the discrepancy namely, issuing
addendums
and publishing same. This mechanism was not utilised by the
COT.
The irregularity created by the use of a
different RFP than the one advertised goes to the core of the values
of fairness and transparency
given the fact that bidders prepare
their tenders based on the specifications provided in the published
RFP.
35
The
resultant unfairness has been recognised by the courts in their
approach to the matter. In
Premier of
the Free State Provincial Government and others v Firechem Free State
(Pty) Ltd
[14]
Schultz JA said:
" A tender should speak for itself Its
real import may not be tucked away, apart from its terms. Yet another
requirement is
that competitors 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 tenderers
knowing what is the true subject of the tender."
It would in the circumstances not only be
incorrect but totally inappropriate to underplay the discrepancy
between the published
RFP and Otumile's revised RFP and to suggest
that it is not material or that it was rectified by a mere briefing
session.
36
The COT effectively contravened the law
as stated in
Al/Pay Consolidated
Investment and others v Chief Executive Officer of the South African
Social Security Agency and others
[15]
where the following was stated regarding the requirements of an RFP:
"An Organ of state must indicate in the
invitation to submit
a
tender:
(a)
If that tender will be evaluated
on functionality;
(b)
That the evaluation criteria for
measuring functionality are objective;
(c)
The evaluation criteria, weight
of each criterion, applicable values and minimum qualifying score for
functionality;
(d)
That no tender will be regarded
as an acceptable tender if it fails to achieve the minimum qualifying
score for functionality as
indicated in the tender invitation; and
(e)
That tenders that have achieved
the minimum qualification score for functionality must be evaluated
further in terms of the applicable
prescribed point systems."
Improper
authorisation of the RFP
37
Another irregularity arises out of
Otumile's lack of authority to participate in the process of drafting
and publication of the
RFP. It was the Bid Specification Committee's
role to determine the specifications for the procurement of goods and
services by
the municipality. In the present case however, both the
published criteria and the criteria relied upon were prepared by
Otumile
and not the BSC. Otumile did not have authority to be
involved in the bid-specification process though the respondents
argue to
the contrary. The respondents submit that Otumile acted in
terms of delegated authority bestowed upon him by the then City
Manager,
Ngobeni. This submission is not sustainable. It was
Ngobeni's responsibility as the City Manager of the COT to approve
the RFP
as per requirement by the SCM regulations. The tender was
large and it was likely to run for a long period of time. It was not
appropriate for Ngobeni to purport to delegate his authority.
[16]
Resultantly, the criteria and decisions taken
in term thereof were rendered invalid.
Failure to submit Municipal Accounts
38
In terms of the RFP tenderers were
required to submit municipal accounts for the directors of the
tendering entity in which it would
be indicated whether they owed any
municipal rates, taxes or charges to the municipality. The RFP
stipulated this as a mandatory
requirement which would result in
disqualification upon non compliance. This sanction was applied
to no less than eight tenderers
during the evaluation process. On the
contrary ARH which failed to comply with this mandatory requirement
was treated differently.
ARH did not submit full municipal accounts
for its four active directors. Instead it submitted documents for
three directors and
no documents at all for the fourth director. ARH
does not deny this failure to comply but submits that such failure
was not material.
39
Regulation 29(5) (b) of the SCM
Regulations specifies that the adjudication committee ought to
confirm that a tenderer's municipal
rates, taxes and services
accounts are not in arrears. If they are not up to date the entity is
precluded from doing business with
the Municipality. The mandatory
nature of the requirements is underlined by its repetition in the COT
Procurement Policy. The submission
of the relevant documents was
meant to enable the municipality to assess the status of the
directors in relation to the municipality
and absent their submission
this could not be done. It would thus appear that this is one of the
instances where ARH received preferential
treatment over other
bidders which constitutes an irregularity in terms of section 217 of
the Constitution which requires that
public procurement occurs "in
accordance with a system which is fair, equitable, transparent,
competitive and cost effective."
40
Further, the COT Procurement Policy also
provides that "[t]o be fair, all possible suppliers must have an
equal opportunity
to bid for the requirements of the City of
Tshwane."
41
It is imperative that tenderers be
treated fairly in relation to each other and this has been emphasised
in numerous court decisions.
Thus in
Metro
Projects
CC
v
Klerksdorp Local Municipality
[17]
Conradie JA said:
"[14] Was the tender process followed
in the present case fair? A high ranking municipal official purported
to give the ninth
respondent an opportunity its tender so that its
offer might have
a
better
chance of acceptance by the decision-making body. The augmented offer
was at first concealed from and then represented to
the mayoral
committee as having been the tender offer. It was accepted on that
basis. The deception stripped the tender process
of an essential
element of fairness: the equal evaluation of tenders. Where
subterfuge and deceit subvert the essence of
a
tender process, participation in it
is prejudicial to every one of the competing tenderers whether it
stood a chance of winning
the tender of not."
42
In
Steenkamp
N.O.
v
Provincial Tender Board of the Eastern Cape
[18]
the Constitutional Court remarked
that tender processes require "strict and equal compliance by
all competing tenders on the
closing day for submission of tenders."
The result of these legal
pronouncements is that the disparate and unequal treatment of
tenderers renders the tendering process
unfair and constitutes an
incurable contravention of the legislative provisions. The two
tenderers, EOH and ARH became the beneficiaries
of preferential
treatment.
Identity of the bidding entity
43
It
is axiomatic that an evaluation of a tender bid must be specific. In
other words, the identity of the bidding party or company
ought to be
clear and unambiguous.
44
This
view was enunciated in
BKS Consortium
v Mayor, Buffalo City Metropolitan Municipality
[19]
where the Court stated as follows:
"It is to be noted that apart from the
letters of comfort there is no firm commitment forthcoming from these
entities in the
sense of entering into
a
joint venture agreement with the
third respondent. One has to take into account that the first
respondent is dealing with public
funds and that, in my opinion,
certainty is required
as
to
which of the entities are involved in the joint venture. A loose
arrangement such as that proposed by the respondent in this
case is
not sufficient. Counsel for the applicant correctly, in my view,
referred to it as an amorphous body of entities against
whom it would
be difficult for the first respondent to enforce its rights, should
the need arise. In my view it is not enough for
these entities to
merely state that they will enter into a joint venture agreement once
the tender is awarded."
45
In
the present case ARH failed to identify itself appropriately in its
bid documents. Instead, it relied on business documents of
other
companies within the ARH group. It identified itself as a private
company but in other parts of its bid it purported to be
submitting
on behalf of a special purpose vehicle (SPV) which had not yet been
formed, alternatively on behalf of a consortium
of companies. This is
precisely the mischief that is referred to in
BKS
Consortium
(supra). ARH was
submitting a bid of a non-existing SPV or consortium of companies.
This anomaly was to rear its head later when
the Build Operate and
Transfer agreement was entered into and would be the source of yet
another irregularity.
46
Provision for a consortium to qualify
for BEE points is made in Regulation 11 of the PPPFA Regulations
provided that the entity
submits a BEE certificate. In the event that
the joint venture is unincorporated, the entity ought to submit a
consolidated B-BBEE
scorecard if it is a group structure. The COT
Procurement Policy has a similar provision that a trust, consortium
or registered
joint venture must submit a B-BBEE status verification
certificate for every separate bid. As indicated earlier, each
director
had to submit a municipal account regarding rates and taxes.
This information would inform the scoring of each bidder. As a
result,
the amorphous manner in which ARH prosecuted its bid was such
that it was unclear who the real bidder was, thus making it
impossible
to evaluate the bid. The conduct of ARH as a bidder was
impermissible and unlawful. It ought not to have been allowed.
47
Form RDC9 of the RFP is quite explicit
in the section which deals with the "Status of concern
submitting tender." It requires
the tenderer to state whether it
is a company, a closed corporation, a partnership, a sole proprietor
or a joint venture. ARH's
bid documents show that it submitted a bid
as a private company. On the item "Certificate of Authority for
Joint Venture and
Consortia" ARH's response was "Not
Applicable." It is therefore self-evident that ARH's contention
that its tender
submission made it clear that the ultimate entity
which would provide the service was to be a joint venture SPV fails
to validate
its bid. Neither does Thobela's assertion that "in
the end ARH submitted a bid as a sole bidder but made it quite clear
in
the bid that the ultimate contracting party would be an SPV."
Failure to assess requisite experience
48
In
terms of the RFP requisite experience was specified as a threshold
qualification requirement. Put differently, a tenderer had
to
demonstrate extensive knowledge in the broadband networking sphere to
enable the BEC to differentiate between the bidders. Despite
this
requirement, the two remaining bidders, ARH and EOH were not tested
via a demonstrable network phase.
49
The SEC decided not to consider the
demonstration network as part of the evaluation process. As
motivation for this omission the
SEC was of the view that "the
two tenderers have a lot of experience." This omission by the
BEC was irrational in that
it not only deprived the SEC of an
opportunity to evaluate and differentiate the two tenderers on an
informed basis in relation
to an aspect which was critical to the
required service but also flouted the COT Procurement Policy which
emphasises that "it
must be ensured that goods and services are
obtained in the most cost-effective manner." Cost
effectiveness related to
obtaining the best product at the lowest
possible cost.
As the Supreme Court of Appeal articulates it
in
Minister of Social Development and
others v Phoenix Cash and Carry
-
PMB
[20]
:
"It follows that
a
public tender process should be so
interpreted and applied as to avoid both uncertainty and undue
reliance on form, bearing in mind
that the public interest is, after
giving due weight to preferential points, best served by the
selection of the tenderer who is
best-qualified by price."
It could therefore not be concluded in the
absence of properly assessing the product offering of ARH that it was
the most competitive
and cost-effective.
Non-compliance with section 33 of the
MFMA
50
The
MFMA directs the relevant spheres of local government to protect "...
own financial integrity in the short- and long-term
so that it can
acquire goods and services at reasonable rates without prejudicing
its overall ability to service the needs of all
the citizens for
which it bears responsibility and to whom it is accountable."
51
More
specifically section 33(1) thereof opens up the process enabling the
relevant stakeholders to comment and ensure that all the
prescripts
have been adhered to.
It provides as follows:
"Contracts having future budgeting
implications:
A municipality may enter into
a
contract which will impose financial
obligations on the municipality beyond a financial year, but if the
contract will impose financial
obligations on the municipality beyond
the three years covered in the annual budget for that financial year,
it may do so only,
if
-
(a)
The City Manager, at least 60
days before the meeting of the municipal council at which the
contract is to be approved
-
(i)
Has, in accordance with section
21A of the Municipal Systems Act-
(aa) made public the
draft contract and an information statement summarising the
municipality' s obligations
in terms of the proposed contract; and
(bb) invited the
local community and other interested persons to submit to the
municipality comments or
representations in respect of the proposed
contract; and
(ii)
Has solicited the views and
recommendations of
-
(aa)
The National Treasury and the relevant provincial treasury
(bb)
The national department responsible for local government; and (cc) If
the contract involves the provision of water, sanitation,
electricity, or any other service as may be prescribed, the
responsible
national department;
(b)
The municipal council has taken
into account-
(i)
The
municipality’s projected financial obligations in terms of the
proposed contract for each financial year covered by the
contract;
(ii)
The
impact of those financial obligations on the municipality's future
municipal tariff's and revenue;
(iii)
Any
comments or representations on the proposed contract received from
the local community and other interested persons; and
(iv)
Any
written views and recommendations on the proposed contract by the
National Treasury, the relevant provincial treasury, the national
department responsible for local government and any national
department referred to in paragraph (a) (ii) (cc); and
(c)
The municipal council has adopted
a
resolution
in which
-
(i)
It
determines that the municipality will secure
a
significant financial economic or
financial benefit from the contract;
(ii)
It
approves the entire contract exactly as it is to be executed; and
(iii)
It
authorises the City Manager to sign the contract on behalf of the
municipality.
(2) . ..
."
52
The
contract that was being entered into by the COT through the BOT was
massive, not only in terms of the implied financial commitments
but
also in terms of the period for which it would run, namely, 18 years.
The provisions of section 33(1) therefore were not only
of direct
relevance, they had to be scrupulously adhered to because of the
potential "impact of those financial obligations
on the
municipality's future municipal tariffs and revenue." (s 33(1)
(b) (ii)) From the evidence tendered by the COT it would
appear that
the requirements set out in section 33 were not adhered to. A few
examples discussed below should serve to illustrate
this view.
Uncontested Reports
53
The
evidence presented by the COT included reports by the Auditor
General, the National and Provincial Treasury and Audit firm Sekela
Xabiso.
54
These
reports illustrated the non-compliance issues at various stages
leading up to the signing of the BOT which were ignored by
the City
Manager who seemed resolute to continue with the project at all costs
despite the concerns raised by other stakeholders.
Absence of a business case
55
The
Municipal Council failed to comply with the requirements of section
33(1) of the MFMA because the broadband project had no proper
business case from the very beginning.
56
It
is common cause that the original intention of the COT was that the
successful bidder would take over the COT's existing 500km
network
and extend it to 1500km. The intention was that the cost of the
existing operators in relations to the 500km network would
be
"re-prioritised" in the form of the offtake amount. This
would imply that the successful bidder would then be responsible
for
paying existing operators. Whilst this ought to have been a foremost
and obvious considerationby the COT and because of the
absence of a
proper business case, this was not done. As a consequence the
Municipal Council did not understand that the BOT agreement
did not
include ARH/ Thobela assuming responsibility for the existing
network. The result was that COT would have to pay all the
amounts
due to existing service providers for the 500km network together with
the offtake amount for the new 1500km network.
57
Bearing
in mind the provisions of section 33(1) (b) which enjoin the
municipal council to take into account the impact of financial
obligation on the municipality's future municipal tariffs and
revenue, the COT failed in its duty to safeguard the public purse
in
this regard. The best way to afford the new network was for the
service provider to be responsible for both the existing budget
to be
"re prioritised" and the extended network. This did
not happen.
58
Evidently
the Municipal Council was not properly informed of the financial
implications of the BOT or alternatively that in assessing
the
project, the council did not pay proper attention to its future
financial implications and its funding.
59
If
a proper assessment was made, the Council would have been able to
establish exactly what the re-prioritisation of the existing
budget
meant. It would have been able to determine what diverting monies
meant and whether the contracts of the existing service
providers
would have to be terminated and what the implications thereof would
be. The decision of the COT Municipal Council was
in the
circumstances based on a wrong or alternatively incomplete set of
facts thus constituting an improper exercise of public
power.
[21]
BOT agreement differed from the one
authorised
60
There
was non-compliance with both section 33(1) (c) (i) and (ii) by the
COT. The BOT agreement which was agreed by the City Manager
contained
a clause obliging the COT to stand in for payment of Thobela's
financial obligations to its funders. This clause was
not part of the
original BOT agreement which served before the Municipal Council.
Clause 33(1) (c) (ii) provides that the Council
"approves the
entire contract exactly as it is to be executed." The City
Manager was not authorised to alter the agreement,
he only had
authority to sign on behalf of the Council.
61
Further,
the Tripartite Agreement, which was part of the BOT Agreement was
never tabled before the Municipal Council, thus depriving
the Council
an opportunity to apply its mind to the terms thereof.
62
Lastly,
in this regard, no resolution was taken by the Council as required in
terms of section 33 (1) (c) (i) in terms of which
it signified that
"the municipality will secure a significant capital investment
or will derive a significant capital investment
or will derive a
significant financial economic or financial benefit from the
contract." It is self-evident that the Council
was not provided
with the full facts on which it could have taken such a resolution.
Instead, from the evidence presented it would
seem that there was a
total disregard of the purpose for which section 33 was enacted and
the COT was in total contravention thereof.
Non-compliance with National Treasury
directives
63
Even
though the City Manager did publish notices in terms of section 33
(1) (a) of the MFMA to invite public participation, it does
not seem
that these yielded any meaningful public participation. There were no
public meetings held subsequent to the publication.
COT submits that
this could be attributed to the paucity of detail in the notices.
There were responses however from public institutions
such as the
National and Provincial Treasury as well as the Auditor General.
64
One of the concerns raised sharply with
the COT regarding the broadband project was non-compliance with the
provisions of the Preferential
Procurement Framework Act
[22]
(PPPFA) and its Regulations. National Treasury contended that the BOT
Agreement constituted a Public Private Partnership (PPP).
In terms of
section 168 of the MFMA a commercial transaction constitutes a PPP
if:
64.1
The
private party must perform a municipal function or use municipal
property for its own commercial purposes
64.2
The
private party must assume substantial financial, technical and
operational risk in connection with that function.
64.3
The
private party must receive a benefit from performing the municipal
function
65
The
COT submits and I accept that because all the above requirements are
met, the broadband transaction does constitute a PPP and
that it
ought to have complied with the relevant statutory requirements. The
then COT administration resisted the National Treasury
directives and
instead engaged in dilatory and evasive response - which it persisted
in until the BOT was submitted to the Municipal
Council. This was
done in the face of the National Treasury concerns and without the
issues raised having been resolved.
66
It cannot be gainsaid that the essence
of the broadband project was to create a broadband infrastructure
which would boost the COT's
service delivery. The Regulations
published in terms of section 168 of the MFMA define "municipal
function" as a municipal
service or any other activity within
the legal competence of a municipality.
67
It is common cause that Thobela assumed
substantial financial, technical and operational risk in terms of the
BOT agreement and
that this served as a basis for the funding
arrangement. It is also common cause that Thobela received a benefit
in terms of the
BOT Agreement and that the agreement constituted a
commercial transaction, in terms which Thobela would receive annual
payments
of the offtake amount and profit by operating as a
wholesaler for bulk services.
68
Had
the COT acceded to and complied with the National Treasury
directives, it would have had to comply also with the requirements
set out in section 120 of the MFMA in that it would have had to
perform a feasibility study prior to concluding a PPP. The
feasibility
study would analyse the future implications of the
project on the COT's operations such as staff redundancies and
obsolescence
of assets. The feasibility study results would then be
submitted to Council which would in turn decide the way forward
regarding
the project. The Council would make the decision subject to
inputs from relevant stakeholders and the local community. It is
common
cause that none of these prescripts were adhered to by the
COT.
Invalidity of the Contracts
69
The evidence tendered by the COT
demonstrates that the BOT and Tripartite agreement are not valid
agreements:
Section 116(3) of the MFMA provides:
"(3) A
contract or agreement procured through the supply chain management
policy of the municipality
or municipal entity may be amended by the
parties, but only after-
(a)
The reasons for the
proposed amendment have been tabled in the council of the
municipality or, in the case of
a
municipal entity, in the council of
its parent municipality; and
(b)
The local community-
(i)
Has been given reasonable
notice of the intention to amend the contract or agreement;
(ii)
Has been invited to submit
representations to the municipality or municipal entity."
70
In
the present case the BOT agreement was subject to a number of
suspensive conditions in terms of Clause 4 of that agreement.
The suspensive conditions were to be fulfilled
by 30 June 2016 and they included the following:
70.1
The
COT was to enter into a Tripartite Agreement on terms and conditions
which were acceptable to the Service Provider
70.2
The
COT had to provide written proof that the offtake amount had been
allocated in COT's approved budget.
70.3
The
agreement and the transactions contemplated therein had been approved
in terms of section 33 of the MFMA.
71
The
parties were aware even at that time that suspensive conditions had
not been fulfilled. For example, the offtake amount had
not been
allocated in COT's approved budget. As a result, and as an attempt to
beat the deadline, ARH's attorneys dispatched a
letter to COT's legal
representatives to extend the deadline to 31 August 2018. Otumile,
COT's GCIO signed a letter granting the
extension of behalf of COT on
28 June 2016. Otumile was not the COT accounting officer. Accordingly
he had no authority to sign
the extension letter.
72
As
alluded to (supra) the BOT was an agreement which had to be approved
by the Municipal Council in terms of section 33 of the MFMA.
The
person authorised to sign on behalf of the Municipal Council was the
City Manager who was the COT's accounting officer. The
accounting
officer must sign the agreement as authorised by the Municipal
Council, that is, without any amendments. By implication
therefore,
any amendments can only be effected by the Municipal Council.
73
The
attempted extension of the period for the fulfilment of the
suspensive conditions by Otumile was null and void. It had no legal
consequences. As a result, the suspensive conditions were not
fulfilled by 30 June 2016 and the BOT agreement lapsed on the date.
74
The
submission by the respondents that the COT is estopped from denying
Otumile's authority is not sustainable. Estoppel cannot
legalise an
unlawful act. This was confirmed in
City
of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd
[23]
where the following was said:
"Estoppel cannot, as I have already
stated, be used in such
a
way
as
to
give effect to what is not permitted or recognised by law."
75
In the circumstances, Otumile's
purported intervention by extending the period for the fulfilment of
the suspensive conditions was
futile in that it had no legal
consequence.
In
Hanuscke
Beleggings
CC
v
Kungwini Local Municipality
[24]
it was stated that the non-fulfilment of suspensive conditions
"render the agreement void from inception, unless the parties
have agreed otherwise."
Delay
76
The respondents strenuously contended
that COT's delay in bringing the review application was unreasonable
and submitted this as
one of the grounds for its dismissal. On the
other hand COT submits that there are several compelling reasons for
the Court to
exercise its discretion in its favour.
77
Section 237 of the Constitution provides
that "All constitutional obligations must be performed
diligently and without delay."
Whilst the injunction imposed by
the Constitution may be clear and unambiguous in providing a
direction, a public body may conduct
itself in carrying out an
obligation such as applying for a review of its own decision in such
a manner that it may proceed with
haste and fall short on the
diligence requirements. Circumstances may require a thorough
investigation before the necessary action.
The determination of
reasonableness or otherwise of a delay may therefore ultimately
depend on the uniqueness of the circumstances
of each case and the
Court ought to take those into consideration in making a
determination regarding delay.
Background
78
The
circumstances of the COT case are set out in Mosola's affidavit where
the following is stated. The Democratic Alliance (DA)
became the head
of a coalition government of the COT on 3 August 2016 after winning
the Municipal elections. They had committed
themselves to rooting out
corruption in the administration of the COT.
79
On
14 November 2016 the Auditor General issued his annual audit report
in which he was highly critical of the broadband project
regarding
its non compliance with legislative and other compliance
requirements pertaining to the award of the tender. He
came to the
conclusion that the tender awarded would be regarded as irregular
expenditure .
80
As a result, the new Executive Mayor
announced the establishment of an extended transactional audit of the
supply chain management
of the broadband project together with the
BOT agreement. It became apparent that the BOT
agreement and the processes leading up to the award were
marred by irregularities.
81
When this process of investigation
began, the COT group CIO was still Otumile. Together with the
previous City Manager, Ngobeni
they were key individuals from the
inception of the broadband project. Simultaneously, Thobela was
insisting on certain payments
in terms of the BOT, maintaining that
failure to do so would constitute a breach by COT.
82
By the middle of April 2017 COT had
approved a new programme manager for the broadband project and
investigations were given a further
momentum. The investigation was
however hampered by difficulties in obtaining access to documentation
due to obstacles caused by
lack of co-operation from officials who
were seemingly still loyal to the previous administration. It was
about this time also
that Otumile also left the COT. Investigations
therefore had to continue in the absence of the two key individuals,
Otumile and
Ngobeni.
83
In order to firm up the investigation
process COT engaged Ernst and Young Advisory Services (EY) to conduct
an extensive forensic
investigation on the broadband contract. EY
experienced similar difficulties to those experienced by COT in its
earlier investigation.
It however managed to conclude its
investigation by September 2017, after the launch of this
application.
84
Despite the overlap in time of the
launch of this application and the completion of the EY report in
September 2017, it is remarkable
to note that they still recommended
that COT consider the possible cancellation of the broadband contract
on the basis that:
(a)
"The service provider may have
contravened the provisions of section 4 of the Competition Act;
(b)
Non-compliance with the provisions of
the SCM policies and procedures; and
(c)
The failure of the Municipality to
properly address the concerns raised by NT and GPT prior to
concluding a contract with the service
provider."
85
Whilst
the respondents contend that a juristic entity does not change as a
result of a new political administration, I accept applicant's
submission that a change in political administration is a
fundamentally significant fact precisely because of the change not
only
in personnel but even in decisions that are subsequently taken.
What happened is that the officials of the previous administration
who vacated their positions with COT were no longer there to account
for their omissions and the new officials had to find their
way
virtually in the dark to establish the correctness or otherwise of
the decisions of their predecessors. In relation to the
broadband
project this was not an easy task given its complexities.
86
In
this context it was significant that Thobela sought to challenge the
COT founding affidavit by Mosola contending that he had
only joined
COT in 2017. Rather than weaken the COT's contention regarding delay
this challenge reinforced the COT explanation
that the new officials
needed time to get to grips with the facts before launching this
application and ensuring the correctness
of the facts in the record.
The interests of justice
87
The
reasonableness or otherwise of the delay is not the only issue to
consider in order to determine the lawfulness of an administrative
decision. In
Khumalo and another v
Member of the Executive Council for Education: KwaZulu-Natal
[25]
the Constitutional Court pronounced thus: "a court should be
slow to allow procedural obstacles to prevent it from looking
into a
challenge to the lawfulness of an exercise of public power."
88
In
the present case the DA became the head of a coalition government of
the COT in August 2016. Not long thereafter they commenced
investigations into broadband acquisitions project. Spurred on by the
findings of the Auditor General, they were already briefing
attorneys
to launch this application in May 2017, despite the difficulties
alluded to earlier.
89
It
is appropriate in this regard to make reference to the remarks of
Francis J in the matter of
Passenger
Rail Agency of South Africa v Swifambo Rail Agency (Pty) Ltd
[26]
(Swifambo)
where
he said:
“[74]
In my view
state institutions should not be discouraged from ferreting out and
prosecuting corruption because of delay, particularly
not where there
has been obfuscation and interference by individuals within the
institution."
90
Francis J continued:
"[94]
In my view to
hold state institutions too strictly to the prescribed period, and
thereby to shield the perpetrators, encourages
the commission and
concealment of egregious conduct of the nature found in this matter
and would discourage prosecution by the
state institutions. It wold
also negatively impact on the administration of justice. There is no
prejudice to the respondent if
the application is heard. The
consequences of refusing to hear the application and,
as a
result, allowing the invalid decision to stand will be borne by
the public at large for many future generations.
In my view, the hearing of the application
will advance the principle of legality and the interests of justice.
This is an appropriate
case where the time period to have brought the
application is extended and should be condoned."
91
In
the present matter the tender was awarded on 11 June 2015 and this
application was launched in 2017. The period and circumstances
under
which it was launched are analogous to Swifambo.
92
The
merits as presented by COT are buttressed by the findings of the
Auditor General regarding the broadband tender. A few
excerpts
from that report will suffice.
"24.3
Non-compliance with paragraph
11 of the MFMA (cost-effectiveness)
Paragraph 112 MFMA states that "The SCM policy of
a
municipality or municipal entity must
be fair equitable transparent competitive and cost effective and
comply with a prescribed regulatory
framework for municipal supply management. No evidence could be
provided that the CTMM had conducted
a
comprehensive cost analysis prior to
the procurement of the broadband infrastructure project. Furthermore,
there was no evidence
to demonstrate that the broadband
infrastructure project was financially sustainable.
In the absence of
a
comprehensive cost analysis the
procurement process undertaken was in contravention of paragraph 112
of
the
MFMA."
93
The report continues:
“
24.5
The AGSA noted in the report to the executive acquisition committee
EA
C
that
the following bidders were disqualified for failing to comply with
the administrative and compulsory requirements of the RFP
Table 6
Bidder
Reason for disqualification
Brightwave Technologies
….
Citiconnect Business Solutions
….
Communication Solutions ….
Neotel
….
Mobile Telephone Network ….
On inspection of Altech Alcom Matomo
("Altech”) bid documents the AGSA noted that the bidder
did not submit the municipal
accounts
of
each director as required by the
conditions of the RFP. The winning bidder submitted
a
list
of
four directors in the bid documents
and only attached the municipal account statements of three directors
instead of 4 directors.
Altech should have been disqualified for
non-compliance with the compulsory requirements of the RFP. It is
clear that the BEG did
not apply the evaluation process consistently
and fairly across all bidders. As
a
result, it appears as though A/tech
may have been favoured even though they did not comply with the
requirements. This is in contravention
of section 112 of the MFMA."
94
Lastly, the report states:
"In respect of 2.3
Management response is noted.
However, the
AGSA
wishes to appreciate the benefits of
the broadband project and the value it will bring to the citizens of
the City. It must be noted
that the business case referred to by
management only reflects the nature detail and extent of the project
including the intended
benefits. This business case was only done in
February 2016. This business case did not include
a
comprehensive cost analysis of the
project. This is in contravention of the requirements of paragraph
112 of the MFMA that requires
a
procurement of goods and services to
be cost effective.
It is therefore incorrect for management to
state that
·
cost
benefit analysis would have been an academic exercise and was not
necessary with such extensive business case. It was not going
to
achieve anything new that is not already covered. In any case the
broadband project will also generate additional revenues for
the City
in our view the city has achieved the same objectives.
Based on the above it is therefore evident
that the CTMM procured the broadband without knowledge of:
•
How much the project would ultimately
cost
the
CTMM; and
•
Without
assessing
whether the project
was
financially sustainable."
95
It patently evident from the conclusions
drawn by the Auditor-General that the 18-year long contract awarded
to the respondents
amounted to a reckless acquisition which would
potentially have a negative impact not only on the current COT
administration but
on successive administrations with the only
beneficiaries being the respondents.
96
In the circumstances and with strong
prospects of success on the merits, I find that it is in the
interests of justice to overlook
and condone the delay in bringing
this application.
Unlawfulness
97
Having
considered all the evidence and the legal prescripts which the COT
ought to have complied with when it embarked on the broadband
contract, I am satisfied that the cumulative effect of the numerous
irregularities from the bidding stage onwards is to render
the award
of the broadband tender unlawful.
98
I
find that the contracts which were entered into, namely the BOT and
the Tripartite agreement ought to be declared unlawful and
set aside.
Just and equitable remedy
99
Once a court has dealt with the merits
of an application, it ought to deal also with the remedy that should
follow the judgment
on the merits.
Section 172(1) (b) of the Constitution provides
that subsequent to a declaration of invalidity, a court: -
"may make an order that is just and
equitable, including
-
(i)
An
order limiting the retrospective effect of the declaration of
invalidity;
(ii)
An
order suspending the declaration of invalidity for any period and on
any conditions to allow the competent authority to correct
the
defect."
Facts and considerations relevant to
remedy
100
The applicant brought the present
application in the public interest. It sought to impugn the award of
the tender and the subsequent
agreements on the basis that they
constituted an infringement of the legality principle and the non
compliance with several
provisions of procurement legislation, the
Municipal Systems Act, MFMA, the Supply Chain Management Regulations
and Supply Chain
Policy of the COT.
101
The procurement legislation which is
founded on section 217 of the Constitution requires an organ of State
which contracts for goods
or services to do so in accordance with a
system which is fair, equitable, transparent, competitive and
cost-effective.
102
The evidence shows that in the events
beginning with the bidding process and up to the conclusion of the
BOT agreement several irregularities
were committed resulting in the
process becoming unfair to other competitive bidders. The
fundamentally flawed contract was criticised
even by the National
Treasury who did not recommend the award in terms of section 33 of
the MFMA. The Auditor General also
reviewed the contract and
found it to be irregular.
103
In
AllPay
Consolidated Investment Holdings (Pty) and others v Chief Executive
Officer, South African Social Security Agency and others
[27]
the Constitutional Court, referring to the previous judgment of
Steenkamp N.O. v Provincial Tender
Board of the Eastern Cape,
[28]
and with reference to a just and equitable remedy said the following
at paragraph [29]
"It goes without saying that every
improper performance of an administrative function would implicate
the Constitution and
entitles the aggrieved party to appropriate
relief. In each case the remedy must fit the injury. The remedy must
be fair to those
affected by it and yet vindicate effectively the
right violated. It must be Just and equitable in the light of the
facts, the implicated
constitutional principles, if any, and the
controlling law. It is nonetheless appropriate to note that
ordinarily
a
breach
of administrative justice attracts public-law remedies and not
private-law remedies. The purpose of a public-law remedy is
to
pre-empt or correct or reverse an improper administrative function.
.
..
Ultimately the purpose of
a
public remedy is to afford the
prejudiced party administrative justice, to advance efficient and
effective public administration
compelled by constitutional precepts
and at
a
broader
level, to entrench the rule of law."
104
The COT seeks an order that the
contracts in question be declared invalid and set aside whilst the
respondents contend that the
just and equitable remedy is for this
Court to allow the contracts to run their full duration. They contend
further that they will
suffer financial prejudice if the contracts
are set aside.
105
It is trite that conduct which is at
odds with the applicable legal prescripts and the rule of law ought
to be set aside. It is
only in exceptional circumstances where the
courts have found it justifiable to depart from the general rule. The
courts have done
so in circumstances where the consequences would be
too dire to contemplate. This was the case, for example in
AllPay
II
(supra). The
AllPay
remedies sought to avoid the risk of
imperilling the rights of acutely vulnerable social grants
beneficiaries. There is no such
risk in the present case.
106
On the contrary, the prejudice which the
respondents contend they will suffer, which is primarily financial,
must be weighed against
the prejudice which the COT and citizens who
are its ratepayers will suffer in the event the contracts are not set
aside. The COT
has a legal and constitutional duty to safeguard both
its short and long term financial integrity primarily in the
interests of
its ratepayers and the public at large. With that
consideration in mind the decision to launch the application to have
the contracts
set aside would not have been made lightly.
107
Despite the submissions by the
respondents that this Court ought to depart from the general rule of
declaring the contracts invalid
and setting them aside, I am not
persuaded that they have made out a case for such a departure.
ORDER
108
In the circumstances I make the
following order:
1)
The
award of the tender, with tender number GICT 01/2014/15, for the
provision of a municipal broadband network project to ARH,
which
decision was communicated to it on 11 June 2915 in a letter dated 9
June 2015 including any purported amendment of such letter
is
declared invalid and set aside.
2)
The
decision of the Municipal Council of the Tshwane Metropolitan
Municipality, in its entirety to
inter
alia,
approve the terms and sign-off
of the build, operate and transfer agreement (''the BOT agreement")
of the Tshwane Broadband
Network for the City of Tshwane taken on 28
April 2016 is declared invalid and set aside.
3)
The
decisions of the erstwhile Group Chief Information Officer and City
Manager to amend clause 4.1 of the BOT Agreement which was
subsequently entered into between the City of Tshwane and Thobela on
5 May 2016, the effect of which was to extend the period provided
for
the fulfilment of the suspensive conditions alternatively, their
purported waiver of such conditions is declared unlawful and
set
aside.
4)
The
following contracts concluded pursuant to the tender award have
lapsed and are unenforceable, alternatively, are invalid and
are set
aside, -
4.1
the BOT agreement
4.2
The Tripartite Agreement entered into
between the City of Tshwane, Thobela, and Absa Bank Limited, signed
on 4 August 2016.
5)
The
first, second and third respondents are ordered to pay the costs of
the application, which costs include the employment of three
counsel.
S.A. M. BAQWA
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
Heard on:
22 - 25 May 2018
Delivered on:
16 July 2019
APPEARANCES
For
the Applicant:
Adv M Rip SC; Adv R
Raubenheimer;
Adv L Nyangiwe
Instructed
by
:
Kunene Rampala Inc.
For
the First Respondent:
Adv MC Maritz SC; Adv E Kromhout; Adv Z Ncontsa
Instructed
by
:
Lowndes Dlamini Attorneys
For
the Second Respondent:
Adv M Chaskalson SC; Adv I Currie
Instructed
by:
Edward Nathan Sonnenbergs Inc
For
the Third Respondent:
Adv M Musandiwa
Instructed
by:
Werksmans Attorneys
[1]
See
Millennium Waste Management (Pty) Ltd v Chairperson of the Tender
Board : Limpopo Province ond others
2008 (2) SA 481
" Mill
ennium Waste" at para 4, referred to with approval in
AllPay
Consolidated Investment Holdings and others v Chief Executive
Officer of the South African Social Security Agency and others
2014
(1) SA 804
(CC) at para 31
[2]
See
Steenkamp N.O . v Provincial Tender Board of the Eastern Cape
2007 (3) SA 121
(CC) at para 33
[3]
AllPay Consolidated Investment Holdings and others v Chief
Executive Officer of the South African Social Security Agency and
others
2014 (1) SA 804
{CC) at para 24 and para 27 ("
AIIPay merits" )
[4]
See
AllPay Merits
(supra) at para 30, citing
African
Christian Democratic Party V. Electoral Commission
[2006 ] ZACC
1;
2006 (3) SA 306
[CC] at paras 25
[5]
State Information Technology Agency SOC limited v Gijima Holdings
(Pty) Ltd
[2017] ZACC 40
;
2018 (2) BCLR 240
(CC)
("Gljima
" )
[6]
See
Gijima
supra at para 18
[7]
[2003] ZASCA 56
; (2003] 3 All SA 21 (SCA)
[8]
Act 32 of 2000
[9]
[2002] ZACC28;
2003 (2) BCLR 1
28; 2003 (S) SA 413 (CC) para 91
[10]
Act 117 of 1998
[11]
Act No 56 of 2003
[12]
Act 5 of 2000
[13]
[2013] ZAWCH C 3
at paras 72-73
[14]
2000 (4) SA 43 (SCA)
[15]
2014 (1) SA 60
4 (CC) at para 35
[16]
See
Chairman, Board on Tariffs and Trade v Teltron (Pty) Ltd
1997
(2) SA 25
(A) at 34 E-F
[17]
[2004] 1 All SA 504
(SCA) at para 14
[18]
[2006] ZACC 16
[19]
Case No 641/2012 01-08-2013 ECG at para 72
[20]
[2007] 3 All SA 115
(SCA) at
para 2
[21]
See
Pepcor Retirement Fund and Another v Financial Services Board
and another
2003 (6) SA 38
SCA at 58G to 59D
[22]
Act 5 of 2000
[23]
2008 (3) SA (1) SCA at para 23
[24]
(2012) ZASCA 112
at
para
11
[25]
[2013] ZACC 49
;
2014 (3) BCLR 333
(CC) a t para 45
[26]
2017 (6) SA 2
23 (GJ) para 74-79
[27]
201 4 (4) 179 (CC)
(AllPay II)
[28]
2007 (3) SA 121
(CC)