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[2019] ZANCHC 11
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Carospan (Pty) Ltd and Another v HOD: Northern Cape Provincial Government: Department of Education and Another (588/2018) [2019] ZANCHC 11 (22 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE HIGH COURT, KIMBERLEY)
CASE
NO.: 588/2018
Date
heard: 10-08-2018
Date
delivered: 22-03-2019
In
the matter between:
Carospan (PTY)
LTD
1
st
Applicant
Northern Cape
Advanced Wireless (PTY) LTD
2
nd
Applicant
And
The
HOD: Northern Cape Provincial
Government:
Department of Education
1
st
Respondent
The
MEC: Northern Cape Provincial
Government:
Department of
Education
2
nd
Respondent
CORAM:
WILLIAMS J:
JUDGMENT
WILLIAMS
J:
1.
The
applicants Carospan (Pty) Ltd and Northern Cape Advanced Wireless
(Pty) Ltd, a joint venture (the JV), were the successful tenderers
under contract NC/DE/002/2016-2017 for the appointment of a service
provider for the leasing of five photo copier high speed printers
for
three years by the Northern Cape Department of Education.
2.
The
respondents are the Head of Department and the Member of the
Executive Council of the Northern Cape Provincial Government:
Department of Education. I refer to the respondents herein as
“
the
Department”.
3.
The
required specifications of the machines were set out in detail in the
tender invitation and were amongst others:
Machine 1 -
Complete
high volume digital production press (continuous form printing)
with a minimum speed of 1350 A4 impressions/images per minute;
Machine 2 –
High
speed cut sheet production printer
with a minimum printing speed
of 250 ppm A4 and A3 duplex printing, saddle stapled and folded;
Machine 3 –
High
speed coulour cut-sheet production printer
with a minimum
printing speed of 100 ppm A4 and A3 duplex printing, saddle stapled
and folded;
Machine 4 – fully
integrated, automated packaging machine; and
Machine 5 – A
booklet binding machine.
4.
The
JV submitted its bid in time and having been found responsive the
JV’s bid was shortlisted. Subsequent hereto the
JV was
invited by the Department to do a presentation on functionality on 18
January 2017. A further presentation on functionality
was held
on 11 May 2017 since the Department had found that the bidders had
focused more on machine functionality at the first
presentation than
the functionality aspects as “
per
criteria”
,
which include project methodology, past experience and the structure
and capacity of the bidder.
5.
The
JV and three other bidders qualified after the functionality test to
be evaluated by the bid evaluation committee. The
JV scored the
most points whereupon the bid was referred to the bid adjudication
committee for further consideration.
6.
On
30 May 2017 the Department requested a meeting with the JV where
various issues were discussed. Amongst others, the
specifications
of the machines to be provided by the JV were
discussed and agreed upon. In this regard the JV indicated that
a separate
booklet binding machine was not necessary as the printing
machines had booklet binding capacity. The models for the
machinery
were agreed upon. Monthly rental was set in an amount
of R1 573 200.00 including VAT. The Department also negotiated
a discount in the form of three months free rental.
7.
After
the meeting of 30 May 2017, the Department awarded the tender to the
JV and on the same day sent a letter to the JV confirming
the
agreement reached. On 31 May 2017 the Department sent an
official confirmation to the JV of the acceptance of their bid,
noting that the total cost of the project is R51 915 600.00.
8.
Thereafter
further meetings were held between the Department and the JV, mainly
concerning the logistics for the implementation
of the installation
of the machines, the signing by the Department of a Master Rental
Agreement which the JV required to obtain
finance for the project,
the signing of a Service Level Agreement (the SLA) between the
parties, and so forth.
9.
In
the meantime and during August 2017 the machines were delivered to
the Department. It appears that at this stage the machines
were
only to be stored at the Department since the parties had agreed that
the rental agreement commence from the beginning of
December 2017,
since the Department’s previous rental agreement would still be
in place until the end of November 2017.
10.
Whilst
in the process of finalising the SLA, the Department’s Deputy
Director – Legal Services, Ms N Alexander, noticed
that the
specifications of the machines which had been delivered did not match
up with the tender specifications. The Department
then called a
meeting with representatives of the JV, Messer P Wilbers and J
Theron, on 23 October 2017 to explain the discrepancy.
11.
At
this meeting Mr Wilbers, the JV’s sales manager, informed that
the specifications of the machines indeed conformed with
the
specifications, but that the machines were updated versions and their
brochures were not available on-line. Mr Wilbers
then e-mailed
the Department a brochure purportedly pertaining to the machines and
which showed that the model SPPRO 8220S, which
had been supplied can
produce 1350 copies per minute.
12.
The
SLA was concluded between the parties on 20 November 2017 and the
machines were installed by the JV during December 2017.
13.
After
installation the Department discovered that not one of the machines
could produce more than 136 images per minute while the
bid
specification for the high volume digital production press was for a
minimum of 1350 images per minute. The Department
identified
other problems with the machines as well (relating to colour, binding
and other capabilities) but for purposes of this
judgment, since the
JV admits that not one of the machines could produce 1350 images per
minute, I will restrict the problems encountered
with the machines to
this function.
14.
The
Department then called a meeting with the JV on 26 January 2018.
The JV was represented at this meeting by Mr A Killian,
the JV’s
Operational Director, and two other gentlemen. Mr Killian
admitted that the product the JV had supplied was
not according to
the specifications and that their sales manager Mr Wilbers had “gone
rogue” by manipulating the brochures
to conform with the bid
specifications. Mr Killian was very apologetic and asked for an
opportunity to scrutinise the specifications
and present an
alternative plan on 29 January 2018. The Department stressed
the fact the JV had misrepresented the capabilities
of the machines
and that the Department would have to cancel the contract.
Nevertheless the JV was given the opportunity
to remedy the problem.
15.
On
29 January 2018 Mr Killian presented as an alternative and to
increase productivity, the use of additional machines at the same
rental but that the rental period be extended to cover the costs of
the extra machines. The JV’s suggestion was not
acceptable to the Department and Mr Killian was informed of the
cancellation of the contract. On 7 February 2018 the Department
cancelled the contract in writing due to misrepresentation which
induced the contract.
16.
The
JV refused to accept the cancellation and on 13 February 2018
tendered to provide the Department with a Ricoh V20100 Roll Feed
Production Printer in the place of two of the machines, which they
allege will comply in all aspects with the bid specifications.
The Department rejected the proposal and requested that the JV remove
the offending machines before 23 February 2018.
17.
The
JV brought this application, initially as a matter of urgency, for
relief essentially that; pending the final adjudication of
an action
to be instituted within 30 days of the granting of the order herein,
the Department be interdicted and restrained from
in any way further
repudiating and/or performing any act of repudiation of the agreement
the parties had reached on or about 31
May 2017 under the particular
tender contract number; that the JV be ordered to provide to the
Department for rental in the
interim
the Ricoh V20100 printer in the place of two SP Pro 8220 S machines
originally indicated in the Master Rental Agreement, that all
the
remaining aspects of the Master Rental Agreement and the Maintenance
Agreement concluded on 19 September 2017 remain in place;
the above
orders serve as an interim interdict; the applicants be ordered to
provide the Ricoh V20100 machine within 70 days of
the application
and that costs of the application be costs in the main proceedings,
alternatively in the event the Department opposes
the application,
that the Department pay the costs of the application.
18.
The
reference in the Notice of Motion to the Master Rental Agreement is
as a result of the assumption by the JV in its founding
affidavit
that the party’s relationship was governed by that agreement.
Subsequently in the replying affidavit the
JV accepted that the SLA
of 20 November 2017 is the relevant agreement. No application
for the amendment of the Notice of
Motion has however been applied
for.
19.
Be
that as it may, the JV contends that the cancellation of the contract
by the Department is unlawful, given the terms of the SLA.
In
this regard Mr Grobler who appeared for the applicant referred to
Government
of RSA vs Thabiso Chemicals (Pty) Ltd
[2008] ZASCA 112
;
2009 (1) SA 163
where
Brand JA held with regard to a dispute about the alleged wrongful
cancellation by the State Tender Board of a contract for
which the
respondent had been the successful tenderer, at 168 J – 169 A
thereof that:
“
I do not
believe that the principles of administrative law have any role to
play in the outcome of the dispute. After the
tender had been
awarded, the relationship between the parties in this case was
governed by the principles of contract law. . .
”
20.
With
this
dicta
in mind Mr Grobler argues that no matter the shenanigans of Mr
Wilbers, all that I should consider at this stage is that the bid
specifications did not require a bidder to provide a specific make or
model of machine and neither was it one of the criteria upon
which
functionality was scored. The contract between the parties, in
the simplest of terms, was for the JV to provide machines
of a
certain capability. Machines were provided and installed which
did not have this capability. In these circumstances
clauses
13.1(c), 16.6 and 16.7 of the SLA apply.
20.1 Clause 13.1(c)
provides for the termination of the contract where the service
provider (the JV) fails to remedy a breach
caused by “
not
delivering the goods and services in line with the required
specifications”
within 7 days of receipt of written notice
from the client (the Department) to do so.
20.2 Clause 16.6
states that the SLA constitutes the entire agreement between the
parties and that no alterations to the agreement
be valid unless
committed in writing and signed by both parties.
20.3 Clause 16.7 is
a non-variation clause which states that no variation of the terms of
the agreement or consensual cancellation
shall be effective unless
reduced to writing and signed by both parties.
21.
The
argument thus being that since the Department has not given the JV
written notice to remedy its breach as per clause 13.1 and
the
agreement has not been varied in writing in terms of clauses 16.6 and
16.7, the cancellation by the Department of the agreement
is unlawful
and the agreement is still extant.
22.
As
far as the issue of Mr Wilbers’ misrepresentation goes, the
argument is that this is an issue which can be dealt with at
trial
stage and that the ambit of the dispute at this stage is whether
there was performance in terms of the SLA (with reference
to Brand
JA’s remarks in the Thabiso case).
23.
I
do not agree with the stance taken by Mr Grobler. Whilst the
dispute has to be determined in terms of the law of contract,
it does
not exclude the effect of misrepresentation on a contract, which is
very much part of the law of contract. It is
also pivotal to
the determination as to whether the JV has shown a
prima
faci
e
right, one of the requisites of an
interim
interdict.
24.
In
Webster
v Mitchell
1948(1) SA 1186 (W) at 1189 Clayden J laid down the approach to be
followed to establish whether an applicant for an interlocutory
interdict has
prima
facie
established
his right as follows:
“
. . . the right
to be set up by an applicant for a temporary interdict need not be
shown by a balance of probabilities. If
it is “prima
facie established though open to some doubt’ that is enough. .
.
The proper manner of
approach I consider is to take the facts as set out by the applicant,
together with any facts set out by the
respondent which the applicant
cannot dispute, and to consider whether, having regard to the
inherent probabilities, the applicant
could on the those facts obtain
final relief at the trial. The facts set up in contradiction by
the respondent should then
be considered. If serious doubt is
thrown upon the case of the applicant he could not succeed in
obtaining temporary relief,
for his right, prima facie established,
may only be open to some doubt’. But if there is mere
contradicting, or unconvincing
explanation, the matter should be left
to trial and the right be protected in the meanwhile, subject of
course to the respective
prejudice in the grant of refusal of interim
relief.”
25.
Ogilvie
Thompson J took a stricter approach in
Gool
v Minister of Justice
1955(2) SA 682 (C) at 688 D-E and said “
in
my view the criteria on an applicant’s own averred or admitted
facts is: should (not could) the applicant on those facts
obtain
final relief at the trial.”
The approach laid down by
Clayden J as modified by Ogilvie Thompson J is what has been followed
numerous times.
26.
This
is especially so where an application for an interdict may be
interim
in form but final in substance as
in
casu,
where the finalisation of an action in all probability will exceed
the 3 year term of the contract. In such instances it
has been
held not sufficient for an applicant to make out a
prima
facie
case: it is necessary to establish the right on a balance of
probabilities.
27.
It
is therefore important to look at how the JV’s version has
unfolded. In its founding affidavit the JV contends that
the
Department could not have been induced into entering into the
agreement by the misrepresentation of Mr Wilbers since the JV
had
already in October 2016, when it submitted its bid, appended a
brochure of the machines it proposed. This brochure
specifically
states that the machines proposed can generate 95, 110
and 135 impressions/images per minute. Despite the capabilities
of
the proposed machines being well below the bid specification, the
JV was found to be responsive and shortlisted. The JV was
then
invited to the functionality meeting of 19 January 2017 where the
specifications were discussed and the brochures were explained.
During the second functionality meeting of 11 May all the aspects of
the first meeting were repeated. These presentations
led to the
meeting of 30 May 2017 where
inter
alia
the models and specifications of the machines were agreed upon
pursuant whereto the JV was awarded the tender.
28.
The
Department, in its answering affidavit, denies that the JV had
submitted any brochures with its bid documents and states that
the JV
first introduced brochures/material when it did not power point
presentations at the functionality meetings. The Department
attached the material which the JV used at these meetings and it
includes a picture of a machine with a description of “
1375
images per minute”.
29.
In
reply the JV has admitted that it had not submitted any brochures
with its bid documents. It fails however to explain how
such a
mistake, on an issue so fundamental to their case, could have been
made in the founding affidavit. The JV also admits
to having
used the material that the Department attached in the functionality
presentations, with the exception of the material
relating to the
machine that can produce 1375 images per minute.
30.
The
first problem I have with the material used at the functionality
presentations is that it is also not the brochure which the
applicant
alleges to have used at these meetings. This material has
obviously been prepared by the presenter for the power
point
presentation and is not a brochure. Secondly the JV’s
denial of the material relating to the machine which can
print 1375
images per minute being used at these presentation, raises more
questions than answers. If it had not been used
and the JV had
used only material relating to the machines which could produce 95,
110 and 135 images per minute referred to in
paragraph 27 above,
why would the Department have agreed to these specifications so
disparate from the bid specifications?
Why the concern by the
Department when the delivered machines, even before installation and
usage, did not appear to be in accordance
with the bid
specifications? Why then did Mr Wilbers find it necessary to
tamper with the brochures to reflect compliance
with the bid
specifications if it was never so represented by the JV?
31.
In
my view the probabilities by far favour the version of the
Department, that misrepresentation induced the contract. That
the misrepresentation went to the root of the contract entitling them
to resile from the contract without having to comply with
requirements of the SLA as alluded to by Mr Grobler.
32.
Mr
Grobler’s argument that the Department in any event cannot
resile from the contract since it has chosen to give the JV
an
opportunity to rectify the problem and therefore has waived its right
to rescind, also does not hold water. Whilst it
is so that a
party who has been induced by misrepresentation into a contract must
make his decision to either stand by the contract
or rescind within a
reasonable time and that he cannot approbate and reprobate, from the
minute of the meeting of 26 January 2018
it is clear that the
Department did not approbate. Mr Killian of the JV was told
that the contract would have to be cancelled.
It was on Mr
Killian’s insistence that the Department gave the JV a weekend
to come up with a proposal to rectify the problem
and when it could
not, the contract was cancelled immediately verbally and within a
week in writing. In these circumstances
it cannot be said that
the Department has waived its right to resile from the contract.
See in this regard
Berkemeyer
v Woolf
1929 CPD 235.
33.
In
these circumstance I am of the view that the JV has failed to show a
prima
facie
right.
34.
I
deal briefly with the other requisites for an an interim interdict
.
The
requirement of irreparable harm and no other satisfactory remedy are
closely linked. Whilst it is so that the JV
will suffer
financial harm by being liable for payments to the financial
institution without the benefit of the rental income from
the
Department, nothing stands in its way to institute an action for
damages agains the Department. As far as the requirement
that
the balance of convenience favour the granting of
interim
relief is concerned, the JV contends that the Department will suffer
no inconvenience should the
interim
interdict be granted, since the Ricoh machine which it tenders for
use by the Department, pending the finalisation of the action
to be
instituted, would comply with the bid specifications, which assertion
has not been denied by the Department. Whilst
this may be so,
an
interim
interdict
cannot be granted merely because the balance of convenience favours
the granting thereof.
35.
In
these circumstances the application must fail. There is no
reason why costs should not follow the result.
The following order is
made:
The
application is dismissed with costs.
CC
WILLIAMS
JUDGE
For
Applicant:
Adv Grobler
Duncan & Rothman
Attorneys
For
Respondent:
Adv M Steenkamp
Mjila & Partners