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[2019] ZAECMHC 46
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Sonasethu General Engineering Services CC v Ntinga O.R Tambo Development Agency Soc.Ltd (448/2019) [2019] ZAECMHC 46 (15 August 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION: MTHATHA
CASE NO. 448/2019
In
the matter between:
SONASETHU
GENERAL ENGINEERING SERVICES CC Applicant
And
NTINGA
O.R. TAMBO DEVELOPMENT AGENCY SOC. LTD
Respondent
JUDGMENT
JOLWANA
J
[1]
The applicant obtained, with the consent of the respondent, an order
interdicting the respondent from giving effect to the cancellation
of
a contract awarded to the applicant for meat inspection and
classification services. Further ancillary orders were also
granted effectively allowing the applicant to continue rendering meat
inspection and classification services pending this application
for
the setting aside as unlawful the notice of cancellation of the
contract issued by the respondent to the applicant.
[2]
The respondent runs the Umzikantu Red Meat Abattoir in Mthatha (the
abattoir) which produces meat for human consumption.
It is in
respect of the said abattoir that the respondent issued a tender for
meat inspection and classification services.
After
the tender processes were completed the respondent addressed a letter
dated 31 July 2018 to the applicant informing it of
having been
appointed to provide meat inspection and classification services at
the abattoir for a period of three years.
In the letter of
appointment a service level agreement was also envisaged presumably
to regulate operational matters flowing from
the award of the
tender. However, when the respondent sent the notice of
cancellation of the contract, the service level
agreement had not yet
been concluded.
[3]
The applicant later received a letter dated 29 October 2018 from the
respondent in which the latter requested the applicant
to furnish it
with qualification certificates in respect of the applicant’s
primary and secondary meat inspection personnel.
These were the
certificates of the meat inspector or animal health technician who
must be registered with the relevant statutory
body and a secondary
meat inspector which is a veterinarian who is registered with the
veterinary council. Secondly proof
was also required that the
deployed meat inspector is competent on meat classification and
grading.
[4]
The applicant was unable to respond to the aforementioned letter
immediately due to unforeseen circumstances, and the applicant
also
felt that in any event the required documents had been submitted to
the respondent together with the bid document. Due
to this
failure to respond to the letter dated 29 October 2018 the respondent
addressed another email to the applicant dated 7
November 2018 in
which the applicant was reminded that it had not responded to the
said letter. It was further pointed out
that if the applicant
did not respond by close of business on the 7 November 2018 the
applicant’s appointment with the respondent
would be
cancelled. The applicant only responded to the email dated 7
November 2018 on the 16 November 2018 allegedly submitting
all the
documents requested on 29 October 2018.
[5]
In its papers the applicant also gives its history with the
respondent pointing out that on 1 August 2015 it was awarded a first
contract and the second one was awarded on 1 September 2017 for the
same services. Thereafter the applicant makes the following
averment:
“
Therefore the same
services have been rendered to the respondent by the applicant
without the need for the specifications as listed/requested
in the
email marked “VAN7”.
[6]
VAN7 is the respondent’s letter dated 29 October 2018 in which
the respondent requested the applicant to furnish it with
the
certificates of the personnel who would be providing meat inspection
and classification services to the abattoir. For
reasons that
will become clear later in this judgment it is surprising that the
applicant was previously awarded contracts “
without the need
for the specifications as listed/requested
”. Having
said that, I am not sure what case is being made or what the
relevance of the two previous contracts is.
I understand the
applicant’s case to be that having been awarded the tender on
31 July 2018 it was never provided with a
notice of breach of
contract or an opportunity to remedy any alleged breach before the
notice of cancellation was dispatched to
it.
[7]
Following the award of the tender to the applicant, the respondent
started a vetting process in preparation for the conclusion
of the
service level agreement with the applicant as indicated in the letter
of award. It was during the vetting process
that they realized
that the applicant did not furnish the respondent with the
certificates for all the personnel required for meat
inspection and
classification services when the bid was submitted.
[8]
In the answering affidavit the rationale for the vetting process and
the need for the meat inspection and classification services
personnel and their functions are described as follows:
“
15. By way of a
brief illustration, the primary meat inspector is the person that
receives an animal from a supplier and/or farmer.
He or she is
the first point of call for the certification of suitability.
Should the primary meat inspector suspect any
deformity and/or
disease on the animal and/or carcass, the latter has a duty to inform
the secondary meat inspector without undue
delay.
16. The secondary meat
inspector, veterinary surgeon, is in terms of the Act, expected to
conduct examination/s on the carcass and/or
authorize further tests
and investigations.
17. On the other hand,
the meat examiner/classifier examines the quality of the carcass.
Thus, it is imperative that all three
personnel be employed by the
assignee and/also be readily available at the abattoir.
18. Thus, as at the time
the applicant submitted tender documents for Bid Serial Number
279/2018, and on the date of closure of
the bids, which was on the 21
June 2018, the applicant did not comply with the required bid and
minimum specifications to justify
being awarded the tender or bid.”
[9]
It also appears that the whole vetting process was also triggered by
the manager of the abattoir, Mr Mapatwana who was apparently
concerned that the applicant did not have a secondary meat inspector
and a meat classifier as required in terms of the Meat Safety
Act 40
of 2000 (the Act). He reported his suspicions to the respondent
which then sent the letter 29 October 2018 to the
applicant.
The said letter reads as follows:
“
Kindly
send through the following documentation:
1.
Primary Meat Inspector or Animal Health Technician (Registered with
the appropriate Statutory body).
2.
Secondary Meat Inspection: Certification of the Veterinarian
(Registered with the South African Veterinary
Council). The
Veterinarian must be available within 1-2 hours if there is any need
to do secondary meat inspection or receive
Red Cross Permit
consignment at the Umzikantu Red Meat Abattoir
Lastly please provide us
with proof that the deployed meat inspector is competent on meat
classification and grading. (Certificate
with SAMIC).
This information will
allow the Agency to finalised the contract agreement between both
parties.”
[10]
As indicated before, there was no response to the above mentioned
letter resulting in the respondent sending another email
to the
applicant on 7 November 2018 which reads as follows:
“
The attached
letter bears reference. I have not received any response on the
letter attached. Failure to respond to
this email by the end of
business today will render your appointment with the Agency rescinded
due to non-submission of the required
documents. This
withdrawal will be effective immediately.”
[11]
The applicant responded to this email with its email dated 16
November 2018 as follows:
“
Kindly find the
attached documents as requested. Ms Likhona Mkhumbini is a
registered Meat Inspector performing Meat Inspection
service at
Umzikantu Red Meat Abattoir. She has recently registered with
SAMMIC the Meat Classifiers Course. She is
likely to furnish in
March 2019.
Should Meat
Classification be required before this period, alternative personnel
shall be used as means of a relief personnel.”
[12]
When the applicant launched these proceeding it did not attach to its
founding affidavit the documents requested in the email
dated 29
October 2018 which were the basis for the alleged cancellation.
The bid document signed by the applicant was filed
by the
respondent. However, the said bid document also did not have
the said documents attached to it. Schedule 14
of the bid
document required the bidders to list the documents attached by a
bidder to its bid document. A number of documents
are listed
therein as being attached by the applicant. However, the
certificates requested in the respondent’s letter
dated 29
October 2018 are not reflected despite applicant’s assertion
that they had been submitted together with the bid
document.
[13]
Denuded of all references to extraneous matters and attachments
relating to the previous contracts entered into between the
applicant
and the respondent, the question is whether the documents required by
the respondent in its letter dated 29 October 2018
were some of the
requirements for bidders in respect of bid no.279/2018. As to
applicant’s allegation that it was never
provided with a
notification of breach or non-compliance with the bid and that it was
never provided with an opportunity to remedy
the alleged breach, it
is difficult to understand how such a contention could be made in the
face of the letter dated 29 October
2018, the respondent’s own
admitted failure to respond thereto and the respondent’s email
dated 6 November 2018 which
triggered the applicant’s email
dated 16 November 2018.
[14]
It is noteworthy that in the applicant’s own email dated 16
November 2018 it is specifically indicated therein that Likhona
Mkhumbini was still at school doing the meat classifiers course and
would hopefully complete it in March 2019. Furthermore,
the
applicant’s failure to attach the required documents in the
founding affidavit despite the fact that in its email dated
16
November 2018 it indicated that the required documents were
attached, is on its own very troubling as is the failure to
attach
the said certificates in the bid document.
[15]
I turn now to examine the bid requirements, in other words, whether
the documents required by the respondent were required
or necessary
documents in the bid specifications for bid no.279/2018. In
Westinghouse
v Eskom Holdings
[1]
the law in this regard was stated as follows:
“
[39]
Proper compliance with the procurement process is necessary for the
process to be lawful. Strict rules of compliance
have been laid
down by the Constitutional court. In
Allpay Consolidated
Investment Holdings (Pty) Ltd & others v Chief Executive Officer,
South African Social Security Agency &
others
[2013] ZACC 42
;
2014 (1) SA 604
(CC) para 39 the court approved the dictum of this
court in
Premier, Free State & others v Firechem Free State
(Pty) Ltd
2000 (4) SA 413
;
[2000] ZASCA 28
(SCA) para 30, where
Schutz JA said:
‘
One of the
requirements … is that the body adjudging tenders be presented
with comparable offers in order that its members
should be able to
compare. Another is that
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 tenders knowing what is the true
subject of the tender…. that would deprive the public of the
benefit of an open and competitive process.’ (My emphasis.)
[40]
The Constitutional Court said in
Allpay
(para 40):
‘
Compliance
with the requirements for a valid tender process, issued in
accordance with the constitutional and legislative procurement
framework, is thus legally required. These requirements are not
merely internal prescripts that [the tender awarding body]
may
disregard at whim. To hold otherwise would undermine the
demands of equal treatment, transparency and efficiency under
the
Constitution. Once a particular administrative process is
prescribed by law, it is subject to the norms of procedural
fairness
codified by PAJA. Deviations from the procedure will be
assessed in terms of those norms of procedural fairness.
That
does not mean that administrators may never depart from the system
put in place or that deviations will necessarily result
in procedural
unfairness. But it does mean that, where administrators depart
from procedures, the basis for doing so will
have to be reasonable
and justifiable, and the process of change must be procedurally
fair.’ (Footnotes omitted.)”
[16]
The bid document for bid no.279/2018 for meat inspection and
classification services was completed and signed by the sole member
of the applicant Miss Vuyiseka Azania Ngudle. It contained
undertakings that Sonasethu General Engineering Services,
Registration
number 2010/135226/23 represented by Vuyiseka Azania
Ngudle:
“
HEREBY
AGREES THAT by signing the
Contract Form
, the Bidder:
1.
confirms that it has examined the documents listed in the Index
(including Schedules and Annexures) and has
accepted all the
Conditions of Bid;
2.
confirms that it has satisfied itself as to the correctness and
validity of the bid, that the price(s), and
rate(s) quoted cover all
the goods and/or services specified in the bid documents; that the
price(s) and rate(s) cover all its
obligations and accepts that any
mistakes regarding price(s) and calculations will be at own risk;
3.
offers to supply all/or any of the goods and/or render all/or any of
the services described in the bid document
to the Ntinga O.R.Tambo
Development Agency in accordance with the:
·
terms and conditions stipulated in this bid document;
·
specifications stipulated in this bid document; and
·
at the price reflected in the space provided,
4.
agrees that this bid document, including the following, shall form
the Contract between the parties in the
event that the Bidder is
successful:
·
Price Schedule
·
Bid Specifications
·
All declarations
·
General conditions of contract; and
·
Special conditions of contract.
5.
Accepts full responsibility for the proper execution and fulfilment
of all obligations and conditions devolving
on it in terms of this
Contract.”
[17]
The bid specifications list the following as the duties of the meat
inspector:
“
1. Perform Primary
and Secondary Meat Inspection as described in the
Meat Safety Act
2000
for Bovine, Ovine and Porcine;
2. Perform Classification
of Bovine, Ovine and Porcine species;
3. Supervise all abattoir
processes starting from receiving to dispatch;
4. Monitor general
abattoir Hygiene;
5. Assist Management
during compliance Audits.”
[18]
It is common cause that the applicant is an assignee as provided for
in section 12 of the Act. In terms of its assignment
by the
Minister of Agriculture, Forestry and Fisheries, as it was then
called, dated 19 December 2017 the applicant is assigned
to provide
meat inspection services in order to enhance meat safety practices at
abattoirs throughout the Republic. I will
return to the
applicant’s assignee status later in this judgment.
[19]
In order to get a full understanding of the legal environment in
which the tenders were invited and the award thereof was made,
it is
imperative to consider some of the provisions of the Act.
Section 4 of the Act contains
inter alia
, the following
provisions:
“
4(1) The Minister
may assign the application of this Act or certain provisions thereof
throughout the Republic or in a particular
area, to any person with
an interest in or particular knowledge of meat and meat safety.
4(2) …
4(3) …
4(4) The chief executive
officer, chairperson or any other person in charge of any assignee
which is not a natural person –
(a) must act on
behalf of that assignee in the exercise of the powers and the
performance of the duties in question; and
(b) may in writing
delegate or transfer to an employee of that assignee any power which
the assignee may exercise or any duty
which the assignee must perform
in terms of this Act, or may in writing authorise or direct any such
employee to exercise such
power or perform such duty.”
[20]
The applicant has not, either in the founding affidavit or the
supplementary affidavit sought to establish compliance with
the Act
regarding the section 4(4)(b) requirement for the assignee powers to
be delegated in writing. In fact it is the respondent
that
brought a veterinarian, Dr Nkubungu into the picture alleging that it
was informed by the applicant that it had employed Dr
Nkubungu.
How the respondent was informed about Dr Nkubungu is not altogether
clear from the papers. The Act clearly
requires that a person
such as Dr Nkubungu be given written delegation of the assignee
powers which are to be exercised on applicant’s
behalf.
There is nothing in the papers that such delegation to Dr Nkubungu
was made nor are the qualifications of Dr Nkubungu
attached or proof
of his registration with the veterinary council. Whilst the
respondent does not dispute that Dr Nkubungu
is or was a veterinarian
in the employ of the applicant there is neither written delegation as
required by the Act nor any confirmation
of Dr Nkubungu’s
appointment or qualifications.
[21]
If at the time that the bid document was completed Dr Nkubungu had
applicant’s delegation of assignee status such delegation
should have been attached to the founding affidavit. The letter
dated 29 October 2018 required certificates of the personnel
who were
to be involved in the meat inspection and classification process.
However, the certificates of Dr Nkubungu or his
proof of registration
with the veterinary council is not attached. In fact the
applicant is discomfortingly silent or vague
at best about its
personnel when in fact the certificates, qualifications and
registration of its personnel with the relevant authorities
were the
main if not the only reason for the cancellation of the contract.
[22]
Section 11(1) of the Act contains
inter alia
the following
provision:
“
11(1) (a) …
(b) the owner of an
abattoir must procure a meat inspection service for that abattoir;
(c) meat inspection
services may only be performed by the national executive officer, a
provincial executive officer, an authorised
person or assignee, who
must perform that function independently from the abattoir;
(d) a person contemplated
in paragraph (c) must be a veterinarian, meat inspector, meat
examiner, animal health technician or such
other duly qualified
person as may be prescribed;”
[23]
The meat inspection service provided for in section 11(1) is defined
in the Red Meat Regulations
[2]
as follows:
“ “
meat
inspection service
” means the performance of ante-mortem,
primary and secondary meat inspections by a registered
inspector who may be
employed by an assignee and may include hygiene
management and regulatory control as agreed on with the provincial
executive officer
of each abattoir and includes reporting of
non-conformances to the provincial executive officer;
“
primary meat
inspection
” means the inspection, by a registered
inspector, of a carcas and organs directly after flaying and
evisceration in terms
of Part VI
B;
“
registered
inspector
” means a person contemplated in section 11(1)(c)
of the Act who is registered by the provincial executive officer
under regulation
111 to do a meat inspection service in a particular
abattoir;
“
secondary meat
inspection
” means the inspection, by a registered
veterinarian of a carcass and organs detained during primary meat
inspection in terms
of Part VI C;”
[24]
Both the Act and the regulations prescribe a number of legal
requirements whose main purpose is to ensure that abattoirs such
as
Umzikantu Red Meat Abattoir, through meat inspection and
classification services, produce and sell to the unsuspecting members
of the public meat that is safe for human consumption
[3]
.
The personnel that must perform the meat inspection and
classification services are required to be appropriately qualified.
For this reason, it is quite audacious for the applicant to make the
submission that the same personnel that is now being used
is the same
personnel that has been used in previous contracts. If over the
years the applicant had successfully failed to
comply with the
regulatory framework by failing to provide proof that it had in its
employ the qualified personnel, that cannot
be the basis for the
non-compliance to be allowed to continue and impose serious health
risks to members of the public.
[25]
This is not a matter of an agreement or understanding between the
applicant and the respondent. The Act requires meat
inspection
service to be performed by appropriately qualified personnel who must
be registered as provided for in the Act and regulations.
The
assignee status of the applicant, without the appropriately qualified
personnel is irrelevant. That status was and is
designed to
enable the respondent to procure the services of qualified meat
inspectors. It cannot be a sufficient basis for
a valid
contract to be concluded without more.
[26]
It is clear from the papers that as at the date of the close of the
bid on 21 June 2018 the applicant did not have all the
appropriately
qualified personnel to whom meat inspection service could be
delegated. The applicant was asked to provide
the certificates
of qualifications of its personnel and it failed to do so. Even
in the founding affidavit, the replying
affidavit and the
supplementary affidavit there are no certificates of any of its
personnel attached including that of Dr Nkubungu
and Dr Bawuti, the
veterinarians. Both Dr Nkubungu and Dr Bawuti are not only
required by the Act to be veterinarians which
appears to be common
cause that they are, the Act requires them to be registered with the
veterinary council. That said even
if both of them were in fact
delegated by the applicant as meat inspectors of which there is no
proof of written delegation, they
had to be appropriately qualified
and registered and had also to be registered with the provincial
executive officer of the Department
of Agriculture.
[27]
In his confirmation letter dated 13 November 2018 attached to the
respondent’s answering affidavit, Dr Bawuti says that
he will
be assisting Miss Vuyiseka Ngudle, a meat inspector. Miss
Ngudle is a sole member of the applicant but is neither
a meat
inspector or an assignee. Secondly Dr Bawuti indicates in his
letter that he will be doing secondary meat inspection
service.
This begs the question , in light of the fact that Likhona Mkhumbini,
the only other employee of the applicant is
not a qualified meat
classifier who should do meat classification if Dr Bawuti is only
prepared to do secondary meat inspection.
These issues,
important as they are, are simply not dealt with by the applicant who
seems to claim entitlement to the contract
on the basis of the
contracts that were awarded to it in the past.
[28]
Even the assignee status of the applicant is highly questionable.
The letter of assignment issued by Minister Senzeni
Zokwana, as he
then was, dated 19 December 2017 was issued to Sethu Consulting.
The applicant is not Sethu Consulting but
Sonasethu General
Engineering Service CC. Whoever and whatever Sethu Consulting
is, it is not clear that it is the applicant.
Therefore even
the assignee status of the applicant cannot be accepted at face
value. I am therefore not satisfied that the
applicant was even
an assignee or that it is the assignee referred to in the letter
issued by the Minister.
[29]
Therefore and for all the above mentioned reasons the basis on which
the applicant has been operating and conducting meat inspection
service, in the absence of anything to the contrary, appears to be
unlawful for want of compliance with the Act and its regulations.
The respondent and its personnel acted unlawfully in awarding the
tender to the applicant without ensuring that the applicant had
in
its employ the appropriately qualified personnel on the date of the
closing of the tender or at the very least, before the tender
was
awarded to the applicant. The assumption that Sethu Consulting
and the applicant are or were one and the same company
is without
basis. Therefore anything done on the strength of that
assumption was similarly unlawful.
[30]
Being an assignee was, in any event, certainly not sufficient for the
applicant to be awarded a tender for meat inspection
service as
defined in the regulations. The applicant also needed to show
that it had the qualified personnel in its employ
or had proper
arrangements for meat inspection and classification services to be
performed as provided for in the Act and the regulations.
It
seems that the applicant was awarded a tender only on the basis of it
being an assignee. That was clearly contrary to
the
respondent’s own bid specifications and therefore unlawful.
[31]
Finally the meat inspection regulations also contain this requirement
in respect of which no case has been made by the applicant
whatsoever:
“
111. Persons
contemplated in section 11(1) c of the Act wishing to provide meat
inspection services must register with the provincial
executive
officer in order to perform these services at a specified abattoir.”
[32]
In fact the applicant makes very little to no attempt at showing that
as at the time of the award of the tender it had complied
substantially with the regulatory framework. Furthermore even
now on its papers no case is made that even belatedly and after
the
correspondence was exchanged between the parties the applicant has
since complied with the applicable regulatory framework.
[33]
The applicant has also fallen foul of the Preferential Procurement
Policy Framework Act 5 of 2000 (PPPFA), a contention which
the
respondent makes. Section 2(1)(g) of the PPPFA reads thus:
“
any contract
awarded on account of false information furnished by the tenderer in
order to secure preference in terms of this Act,
may be cancelled at
the sole discretion of the organ of state without prejudice to any
other remedies the organ of state may have.”
[34]
An acceptable tender is defined in the PPFA as “
any tender
which, in all respects, complies with the specifications and
conditions of the tender as set out in the tender document
.”
The applicant’s tender did not comply with the specifications
set out in the tender document. Furthermore,
the
applicant needed to have complied with the Act and the applicable
regulations for a valid award of the tender. It seems
to me
that the tender was awarded in complete disregard of the regulatory
environment at best and grossly negligently.
[35]
The non-compliance with the Act, and the regulations, especially as
it relates to meat inspection service imposed a serious
health risk
to the people who get their meat at Umzikantu Red Meat Abattoir.
That must surely mean that the respondent not
only had a right but
also a duty to investigate its suspicions and establish the facts.
The onus was on the applicant to
prove that it did comply with the
regulatory framework when the tender was closed on 21 June 2018 or at
the very least when the
required documents were requested.
This it failed to do nor has it done so even now. The initial
decision to
award the tender to the applicant had no legal basis
and/or was materially influenced by an error of law on the part of
the respondent.
[36]
It follows that any contract entered into in respect of bid
no.279/2018 for meat inspection and classification services is
invalid. In the result the application must fail. [37]
The following order will issue:
1. The application is
dismissed.
2. The applicant is
ordered to pay costs of this application including costs of the
hearing of the matter on 14 February 2019 and
21 February 2019.
______________________
M.S.
JOLWANA
JUDGE
OF THE HIGH COURT
Appearances
Counsel
for the Applicant: L.R. BRAUNS
Instructed
by: MALUSI & CO ATTORNEYS
C/O
JOLWANA MGIDLANA INC
Mthatha
Counsel
for the Respondent: L.L. SAMBUDLA
Instructed
by: WT MQANDI & ASSOCIATES
Mthatha
Heard
on: 13 June 2019
Delivered
on: 15 August 2019
[1]
Westinghouse Electric Belgium Societe Anonyme v Eskom Holdings (Soc)
Ltd and Another 2016 (3) SA 1 (SCA)
[2]
Regulations published in government gazette no.26779 on 17 September
2004 by the Minister of Agriculture in terms of
section 22
of the
Meat Safety Act 40 of 2000
[3]
The preamble to the Act reads thus: “To provide for measures
to promote meat safety and the safety of animal products;
to
establish and maintain essential national standards in respect of
abattoirs; to regulate the importation and exportation of
meat; to
establish meat safety schemes; and to provide for matters connected
therewith.”