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[2019] ZAFSHC 24
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Pro-Care Contracting (Pty) Ltd and Anor v Municipal Manager of Masilonyana Local Municipality and Others (1063/2019) [2019] ZAFSHC 24 (20 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 1063/2019
In
the matter between:
PRO
CARE CONTRACTING (PTY)
LTD First
Applicant
HT
PELATONA PROJECTS (PTY) LTD Second
Applicant
And
THE MUNICIPAL MANAGER OF THE
MASILONYANA LOCAL
MUNICIPALITY 1
st
Respondent
THE EXECUTIVE MAYOR OF THE
MASILONYANA LOCAL MUNICIPALITY
2
nd
Respondent
MASILONYANA LOCAL
MUNICIPALITY 3
rd
Respondent
MATJABENG
JV 4
th
Respondent
JUDGMENT
JUDGMENT
BY
:
NAIDOO J
HEARD
ON:
18 MARCH 2019
DELIVERED
ON:
20 MARCH 2019
[1]
This matter came before me as an urgent application, which was
previously enrolled for hearing on 14 March 2019, and was postponed
to 15 March 2019 for hearing. Due to the late filing of the opposing
affidavit of the 1
st
to 3
rd
respondents, and a
power outage, due to electricity load shedding, the matter was
postponed to 18 March 2019 for hearing. The 4
th
respondent
also opposed the application and filed his opposing affidavit on 13
March 2019. Mr S Grobler represented the applicants,
Mr N Rampai
represented the 1
st
, 2
nd
, and 3
rd
respondents and Mr Steenkamp represented the 4
th
respondent.
[2]
The background, very briefly, is that the two applicants and the 4
th
respondent, amongst others, were bidders in respect of a tender
invitation put out by the 3
rd
respondent for the upgrading and rehabilitation of the Winburg Water
Treatment Plant. It came to the attention of the applicants
in
December 2018 that they were not successful, and at that stage they
were not aware who the successful tenderer was. Their attorney
requested reasons and supporting documentation such as minutes and
reports relevant to the decision in question, from the 3
rd
respondent. No response was received from the 3
rd
respondent, and the 1
st
and 2
nd
applicants
decided to join forces, as they both believed that they had submitted
compliant bids, which should have been successful.
This belief was
based on the release of the tender results showing that both
applicants were shortlisted as successful bidders.
They would of,
course be subject to the two stage assessment referred to later in
this judgment. An application was launched on
11 December 2018, in
which an order was sought to compel the 3
rd
respondent to furnish the required information. Mr Grobler advised
that this application was ultimately withdrawn, ostensibly on
the
advice of the Judge President, who indicated that other parties
should be joined.
[3]
The 3
rd
respondent’s failure to furnish the requested information
continued, causing the applicants to launch an application, on
an
urgent basis, to compel the 3
rd
respondent to furnish the requested information. This application was
heard on 14 February 2019, and the court granted the order,
setting
out specifically the information and documentation to be furnished by
the 3
rd
respondent, who was given 5 days from the date of the order to
furnish the information. These five days expired on 21 February
2019.
There was still no response from the 3
rd
respondent. The applicants then launched the current application on 7
March 2019, for hearing on 14 March 2019. The 1
st
,
2
nd
and 4
th
respondents were joined as parties.
[4]
The orders initially sought in this application, in essence, are:
4.1 The 1
st
and 2
nd
respondents are found to be in contempt of the order granted on 14
February 2019;
4.2 A
rule nisi
be issued, returnable on a date determined by the court, in terms of
which the 1
st
and
2
nd
respondents
are to appear
personally before this court and
provide any evidence they desire to give, or make any representation
they wish in respect of how
the court should sanction their defiance
of the court order;
4.3 Pending the finalisation of application by the
applicants, to be instituted within 5 days (presumably of this
court’s
order), for urgent review, the respondents are
interdicted and restrained from in any way further acting upon the
decision of the
1
st
and/or 2
nd
respondents to award the contract to the 4
th
respondent; The 1
st
and 2
nd
respondents are ordered to pay the costs of the application
personally on the scale as between attorney and client. Should the
3
rd
or 4
th
respondents oppose, they are ordered to pay the costs, jointly and
severally with the other respondents, the one paying the other
to be
absolved.
[5]
It is also common cause that the applicants received on 13 March
2019, the documentation from the 1
st
,
2
nd
and 3
rd
respondents that was ordered by the court on 14 February 2019. This
consisted of the minutes of the respondents’ Bid Evaluation
Committee and the Bid Adjudication Committee. This led to discussions
between the parties, and the applicants advised this court
that they
will no longer pursue the prayer for an order of contempt of court
against the 1
st
2
nd
and 3
rd
defendants. This therefore left two issues for this court to
determine, namely the urgency of the application and the interdict
against the continuance of work by the 4
th
respondent, in terms of the contract between it and the other
respondents.
[6]
The respondents disputed that the matter was urgent and asserted that
any urgency claimed by the applicants was self-created
and therefore
ought not to be entertained by this court. Mr Steenkamp referred to a
number of cases in his Heads of Argument handed
up during argument,
which deal with the issue of self-created urgency. The essence of
these decisions is that the applicant must
act swiftly and institute
proceedings at the earliest available opportunity. The longer the
applicant takes to institute litigation,
the more urgency diminishes.
Mr Steenkamp argued that the applicants knew in December 2018 that
they should have asked for an interim
interdict, as they requested
the municipality to give an undertaking that implementation of the
contract would be suspended. This
was not done in the application
launched in December 2018, and subsequently abandoned, nor was it
prayed for in the application
heard on 14 February 2019. They cannot
now claim, four months later that the matter is urgent. He also
argued that in the special
conditions to the tender the municipality
indicated that it will not necessarily accept the bid with the
highest points. In the
interim, the 4
th
respondent has already established the site and made enormous
financial commitments in order to execute the contract. It would
suffer severe prejudice and face financial ruin if the interim order
suspending the contract were to be granted. Mr Steenkamp also
argued
that the applicants have not yet launched the review application.
[7]
Mr Rampai argued along similar lines regarding urgency, arguing that
the applicants knew in December 2018 that neither of them
was awarded
the tender. Nothing stopped them from bringing an application for an
interdict at that stage, even if they did not
have reasons from the
1
st
to 3
rd
respondents as to why the tender was not awarded to them. He alleged
that the 3
rd
respondent complied with the court order of 14 February 2019 by
forwarding the documents, via e-mail to the applicants’
attorney on 22 February 2019. Mr Rampai addressed a letter to Ms
Sonel Pienaar, the applicants’ attorney on 12 March 2019
advising her that the documents had already been furnished to her
office. A screenshot of an email allegedly forwarded to
sonel@peyperattorneys.co.za
on 22 February 2019 at 4.59 pm, with attachments
reflected,
inter alia,
as “Bid Evaluation Committee report” and “Bid
Adjudication Committee report”, was attached to the letter.
The
e-mail was sent by a Neo Rabanye from the e-mail address
nrabanye@masilonyana.co.za
.
An attachment to the 1
st
respondent’s Opposing Affidavit was a letter by Ms Pienaar
indicating that she responded the same day (12 March 2019) and
advised that the documents were not received by her, and pointed out
that the current application would not have been launched
if the
documents had been received. She also indicated that they would not
to proceed with prayers 1 and 2 of the Notice of Motion
if the
documents were received by 13 March 2019. I do believe she meant
prayers 2 and 3, as prayer 1 is for condonation for the
applicants’
non-adherence to the Rules of Court. The documents were then
furnished by Mr Rampai to Ms Pienaar on 13 March
2019.
[8]
Mr Grobler, in Reply pointed out that it would have been inadvisable
for the applicants to proceed with an application for an
interdict
prior to receiving the information requested from the municipality.
The
appellants did not know if there was an
irregularity or not. This could only be determined upon receipt of
the requested information.
Prior to that the appellants would not
have been able to make out a prima facie case for the interdict. I
agree. He also
pointed out that in terms of section 5(1) of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA), the
applicants had 90
days from the time they became aware of the
administrative decision to request reasons for the decision. If there
is no reply,
then, in terms of section 5(3) of PAJA there is a legal
presumption that the decision was taken without good reason. The
respondents
had not addressed these issues.
[9]
With regard to special conditions of the tender
regarding the non-acceptance of the bid with the highest points, he
acknowledged
that the municipality would have such a discretion but
that in terms of the Preferential Procurement Framework Act (5 of
2000),
there must be objective criteria for doing so and tenderers
must be informed beforehand of such criteria. This was not done by
the municipality in this case. The 4
th
respondent alleged that two water pumps in Winburg had broken down
and the residents of Winburg are without water. The pumps need
to be
replaced urgently and if the contract is suspended then the residents
of Winburg would be without potable water. Mr Grobler’s
answer
to this is that the applicants have no objection to the municipality
instructing the 4
th
respondent to repair or replace the water pumps immediately so that
water can be supplied to the residents. The rest of the contract
can
then be suspended pending finalisation of the review application
which the applicants intend instituting urgently.
[10]
As indicated, the municipality furnished the requested documents to
the applicants only on 13 March 2019. In considering the
probabilities of the applicants receiving the documents on 22
February 2019, the actions of the parties must be examined. The
applicants have been making concerted efforts since December 2018 to
obtain reasons and documentation from the municipality to
substantiate its decision to award the tender to another bidder,
without success. Their attorney took the trouble to write to the
municipality a day or so prior to the expiration of the five days
stipulated in the court order of 14 February 2019 to enquire
if the
information would be forthcoming, and received no response. It would
have made no sense for them to launch this current
application,
seeking a contempt of court order against the municipality and its
functionaries, if they had received the very information
they had
been repeatedly requesting. The municipality, on the other hand, did
not react with the surprise and/or indignation that
would have been
expected, when the current application was served on it on 7 March
2019. If it did indeed send the documents to
the applicants’
attorney, it would have been expected of either the 1
st
or 2
nd
respondent
to immediately call or write to the applicants’ attorney and
enquire why the application was launched in view
of their having
furnished the requested documents. Their response five days later is
telling.
[11]
In considering the question of urgency, I have looked carefully at
the history of the matter and the way the relevant events
unfolded.
The minutes of the Bid Evaluation Committee (BEC) and Bid
Adjudication Committee (BAC) are dated 6 November 2018. These
were
furnished to the appellants by the municipality only on 13 March
2019, and yet must have been readily available to it in order
for it
to have awarded the tender to the 4
th
respondent, presumably some time in November 2018. It is inexplicable
why the municipality failed to respond to the applicants’
request in December 2018. They certainly have not explained this
either in their opposing affidavit or in argument in court. Had
they
done so, they would have obviated the need for the applicants to have
repeatedly approached the court for relief. The fact
that the
municipality reacted only after facing the threat of an order for
contempt of court being granted against it, indicates
dilatoriness
and an element of wilfulness on its part.
[12]
It certainly does not lie in the mouth of the municipality, or for
that matter, the 4
th
respondent, to criticise the applicants for not seeking an interdict
in December 2018. The applicants correctly pointed out that
they
would have been unable to do so, as they had no information upon
which to base their application and make out the required
prima
facie
case for such an order. It is one thing
knowing the procedure that would follow upon the award of a tender
and quite another to
seek a court order without knowing the reasons
for the decision taken in the matter. This only became apparent to
the applicants
on 13 March 2019, when the minutes of the BEC and BAC
were furnished to them. It seems their suspicions were confirmed that
the
decision was based on good grounds open to attack.
[13]
The minutes of the BEC reflect that four bidders passed the
functionality stage of assessment. The 2
nd
applicant and 4
th
respondent were amongst these four. The 1
st
applicant failed the functionality stage of the assessment. The 4
th
respondent scored the highest points in this first stage of the two
stage assessment. The 2
nd
applicant scored the highest points in the Preferential Points
System, being the 2
nd
,
and more important stage. The recommendation of the BEC to the BAC is
that the choice for appointment of a tenderer for the upgrading
and
rehabilitation of the Winburg Water Treatment Plant be made between
the 2
nd
applicant
and the 4
th
respondent. The BEC further resolved that
“
on
the basis of locality Matjabeng JV be given consideration to boost
the Municipality’s local economy”
[14]
The BAC agreed with the recommendation of the BEC that Matjabeng JV
be appointed for the Upgrading and Rehabilitation of the
Winburg
Water Treatment Works. This recommendation was preceded by the remark
that
“
The BAC further satisfied themselves
with the two stage bidding process followed, that being functionality
and preferential point
system”.
It is clear
from the BEC minute that the 2
nd
applicant
scored
the highest points in the second stage, and in accordance with
procurement procedures, ought to have been awarded to contract,
unless there were objective criteria to depart therefrom. From the
papers before this court it does not appear that such criteria
were
included in the tender documents, and I would have to accept the
assertion of Mr Grobler that this was not done, so that tenderers
were not informed beforehand that these criteria would be considered.
Mr Grobler pointed out that the 4
th
respondent is a Gauteng based entity, and not local to the Free State
or Winburg, so it is not clear how it would boost the local
economy.
The opposing affidavit of the 4
th
respondent confirms its locality.
[15]
Based on these factors, the 2
nd
applicant, in my view
,
has
established a prima facie right, not only to apply for the review of
the decision
of the municipality to award the
tender to the 4
th
respondent, but also to interdict the municipality and the 4
th
respondent from continuing with the implementation of the contract.
In my view, the earliest opportunity to have effectively done
so
would have been at this stage, as it would have been inappropriate
for the appellants to have done so at an earlier stage, without
the
requisite information coming to hand. I must point out that it is
evident from the citation of the parties in the two earlier
applications that the applicants were not aware of who the successful
tenderer was. The 4
th
respondent was only added as a respondent in the current application.
It seems that this information only came to the knowledge
of the
applicants prior to the launching of the current application.
Similarly the applicants were clearly not in a position to
institute
the review proceedings without the relevant information. The
submissions by the respondents that the applicants have
not issued
review proceedings is without merit and certainly not understood.
[16]
The municipality, on the other hand, was clearly aware of the
successful tenderer, but also as early as 4 December 2018, became
aware that there was a potential challenge to its decision, when it
was asked by the applicants to give an undertaking to suspend
implementation of the contract until the requested information was
furnished to them to enable them to assess whether they will
proceed
to apply for a review of the decision. In spite of this, the
municipality not only completely ignored the legitimate requests
of
the
applicants, but authorised and allowed the 4
th
respondent to establish the site and incur the expenses that it
alleges it has incurred. The court order of 14 February 2019 was
just
two weeks after the 4
th
respondent allegedly established the site, at the end of January
2019. It could not have done much by way of implementation of
the
contract at that stage. The municipality was made aware on 14
February 2019, by the appellants’ attorney that he court
had
granted an order that morning, and what the import of the order was.
The municipality made no attempt at that time to halt
the
implementation of the contract until the issues between it and the
appellants were resolved, and prevent unnecessary escalation
of
expenses. It was expected of the municipality as the custodian of the
public purse to take all reasonable steps to guard public
funds
jealously and utilise such funds judiciously. The conduct of the
municipality in the present matter fell far short of its
duties and
obligations in this regard.
[17]
I have taken note of the contents of the 4
th
respondent’s opposing affidavit as well as the arguments in
court concerning the prejudice it will suffer, with regard to
expenses that it has incurred thus far in furtherance of the
contract. The court was told that the total value of the contract
is
in excess of R20 000 000.00. It is in the public interest
to ensure that this matter is resolved in a manner that
occasions the
least wasteful expenditure of public money. The 4
th
respondent has indicated that it has incurred expenses of just over
R500 000.00 in initial expenses. It has a liability of
approximately R200 000.00 per month in salaries, and alleges
that it would face financial ruin if the contract were to be
suspended.
[18]
Mr Grobler pointed out that the applicants would institute the review
application within 5 days of this court’s order,
and will be
able to secure a date in May 2019 for the hearing of this matter. I
took the liberty of enquiring about available dates
from the Chief
Registrar of this Court, and was advised that the matter can be
enrolled as early as 15 April 2019. The other dates
that could be
made available are 6 May 2019 and 20 May 2019. With regard to the
financial prejudice that the 4th respondent alleges
it would suffer,
Mr Grobler pointed out that if the 4
th
respondent is instructed to repair the two broken water pumps, this
will be a cost of R200 00.00, which is recoverable from the
municipality. The residents of Winburg will then have access to
potable water in the short term. The rest of the contract is due
for
completion by June 2020.
[19]
The resolution of this matter on an urgent basis will minimise the
costs involved and would still be the cheaper alternative
to allowing
the 4
th
respondent to continue with implementation of the
contract. The 4
th
respondent will also be entitled
to recover the cost of the work it has performed to date, and costs
of “standing time”,
so it will not be out of pocket to
the extent it claims. The practice in this Division is indeed to
treat review applications of
this nature on an urgent basis, for the
very reason of the costs involved, which ultimately impact on the
public whose interests
are meant to be served. The hearing of the
review application on an expedited basis reinforces my view that this
matter is one
which falls to be treated as urgent, in order that the
negative impact on the interests of the various parties involved, is
minimised.
I have indicated the dates
available for the hearing of the review application. The
parties would be well advised to agree on truncated dates for the
filing
of further process and documents in order that the matter may
be heard without undue delay.
[20]
With regard to the issue of costs, the applicant seeks an order that
the 1
st
and 2
nd
respondents pay such costs personally on an attorney and client
scale. While I have expressed my view on the conduct of the
municipality,
no evidence has been placed before the court that the
1
st
and 2
nd
respondent conducted themselves in a manner that warrants an order
for costs against them personally. They were not cited in the
previous application, and I can only infer that they were joined in
this application as a result of their respective positions
in the
running of the affairs of the municipality. It must be noted that by
virtue of their positions, they would have a number
of subordinate
functionaries also involved in the day to day functioning if the
municipality, and reporting to them. In my view
this does not,
without more, justify imputation of personal misconduct or negligence
to warrant such a punitive costs order at
this stage. This aspect
would be more appropriately canvassed at the hearing of the review
application.. With regard to the 4
th
respondent, it would be liable on the basis that costs follow the
result.
[21]
In the circumstances, the following order is made:
21.1 Condonation is granted to the applicants for
non-adherence to the Rules of Court relating to time periods and
service, so that
the
matter could be heard as an
urgent application in terms of Uniform Rule 6(1);
21.2 The Applicants are directed to institute, within
Five (5) day of the date of this order, an application for the review
of the
decision of the1st respondent and/or the 2
nd
respondent and/or the 3
rd
respondent awarding the contract to the 4
th
respondent;
21.3 Pending the finalisation of the review referred to
in 21.2, the respondents are interdicted and restrained from acting
in any
way, save as provided in 21.4, to further execute upon the
contract arising from the decision of the 1
st
respondent and/or the 2
nd
respondent
and/or the 3
rd
respondent to award such contract to the 4
th
respondent.
21.4 The 1
st
respondent and/or the 2
nd
respondent and/or the 3
rd
respond is/are authorised to instruct the 4
th
respondent to repair or replace the two non-functional water pumps
required to provide potable water to the residents of Winburg,
for
which the third respondent will be liable to compensate the 4
th
respondent.
21.5 The 3
rd
and 4
th
respondents
are ordered to pay the costs of the application, jointly and
severally, the one paying the other to be absolved.
__________________
S
NAIDOO J
On
behalf of Applicants: Adv. S Grobler
Instructed
by: Peyper Attorneys
Dynarc
House
200
Nelson Mandela Drive
Bloemfontein
(Ref:
Ms S Pienaar)
On
behalf of 1
st
,2
nd
&3
rd
Respondent: Mr N Rampai
Instructed
by: Rampai Attorneys
48
Gen Hertzog Street
Dan
Pienaar
Bloemfontein
(Ref:
Mr Rampai)
On
behalf of 4
th
Respondent: Adv Steenkamp
Instructed
by: Kramer Weihmann & Joubert Inc
KWJ
Building
24
Barnes Street
Westdene
Bloemfontein
(ref:
CV457/emk)