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[2019] ZAECELLC 13
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Hemipac Investments (Pty) Ltd v Buffalo City Municipality and Others (1525/17) [2019] ZAECELLC 13 (2 May 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, EAST LONDON)
Case No:1525/17
ECD: 4125/17
In
the matter between:
HEMIPAC
INVESTMENTS (PTY) LTD
Applicant
And
BUFFALO
CITY MUNICIPALITY
First
Respondent
STHATHU
FUNDING (PTY) LTD
Second
Respondent
JOHN
MULENGA KAYULA NO
Third
Respondent
VUYOKAZI
KAYULO NO
Fourth
Respondent
JONATHAN
ANDREW RADEMEN NO
Fifth
Respondent
JUDGMENT
TOKOTA
J:
[1]
This is an application for the review and setting aside of the
decision of the first
respondent to disqualified the applicant and
award a tender to the second respondent. Only the first respondent
has decided to
take issue with the review. Although the second
respondent initially filed a notice of opposition it later withdrew
and decided
to abide the decision of this court.
Factual
matrix.
[2]
The factual background of the matter can be summarised as follows: On
11 October 2016
the first respondent issued an invitation to tender
for THE PROVISION OF OFFICE ACCOMMODATION: ENTERPRISE PROJECT
MANAGEMENT OFFICE.
On 16 November 2016 (which was a closing date) the
applicant submitted two tenders. First, it tendered Caxton House
Building comprising
of an area of approximately 694.4 square metres
with a monthly rental of R67 496.00.00. Second, it offered its
building at
Sanlam Building with a space of 723.8 square metres and a
monthly rental of R62 904.00.
[3]
The first respondent received four bids namely; Mk Consulting, SKG
Properties, Hemipac
Investments comprising of Caxton house and Sanlam
Building (the applicant); and Sthathu Funding. Mk Consulting was
disqualified
on the basis that it did not meet safety standards
required for occupation. Both bids from the applicant were
disqualified for
being non-responsive in that they did not offer the
required area of 850m
2
. The Bid Evaluation Committee (BEC)
recommended that the tender be awarded to the second respondent. On 7
June 2017 the Bid Adjudication
Committee (BAC) approved the
recommendation. On 29 June 2017 the second respondent was advised
that it was successful in the bid.
On 7 July 2017 the applicant was
advised that both its bids were unsuccessful.
[4]
Subsequently the applicant sought, in vain, the reasons as to why it
was unsuccessful
and the bid documents of the successful bidder.
Having failed to obtain reasons and the bid documents it ultimately
launched the
present proceedings on 14 December 2017. There was a
considerable effort to obtain an undertaking not to implement the
award. Although
the first respondent did not formally accede to the
request, during argument I was informed that the tender had not been
implemented
and no lease agreement has been signed. I was referred to
a letter written by the second respondent’s attorneys which
confirmed
that the award has not been implemented.
Conduct
of the first respondent.
[5]
The review proceedings have been launched in terms of rule 53 of the
Uniform rules
of this court. Consequently the first respondent was
obliged to deliver the record relevant to its decision together with
any such
reasons it may have in reaching at its decision. There was
some form of reluctance, on the part of the first respondent, to
deliver
the record to the extent that the applicant had to invoke the
provisions of rule 30A (1) compelling the first respondent to deliver
such record. The record was ultimately delivered in dribs and drabs.
The final supplementary record was delivered on 4 July 2018
more than
six months after the launch of the proceedings. As will appear in
this judgment the record was still incomplete when
it was delivered
in July 2018. I will deal immediately with the reasons why it is
important to deliver a full record.
The
significance of the record to be delivered in terms of rule 53
.
[6]
For some reasons unbeknown to the applicant the first respondent
acted as if it was
reluctant to file the record in terms of rule 53.
The same goes with the reasons for the decision it made to the extent
that such
reasons had to be furnished by its legal representatives.
There is no need to overemphasize that public bodies are obliged to
give
reasons for the decisions affecting other people’s rights
both in terms of the Constitution and the Promotion of Administrative
Justice Act No.3 of 2000 (PAJA). These reasons must indicate how the
decision was arrived at and must not merely amount to conclusions.
Full reasons will enable the person affected thereby to decide
whether or not the ultimate decision was justified. The learned
author
[1]
puts it thus:
'(I)t is apparent that
reasons are not really reasons unless they are properly informative.
They must explain why action was taken
or not taken; otherwise they
are better described as findings or other information.'
[2]
[7]
It still remains a mystery to this court as to why the first
respondent adopted an
uncooperative attitude. It is by now settled
law that the award of a tender is an administrative action. Section
33 of the Constitution
of the Republic of South Africa Act 1996 (the
Constitution) provides that: “(
1) Everyone has the right to
administrative action that is lawful, reasonable and procedurally
fair.
(2)
Everyone whose rights have been adversely affected by administrative
action has the right to be given written reasons.
(3)
National legislation must be enacted to give effect to these rights,
and must-
(a)
provide for the review of administrative action by a court or, where
appropriate,
an independent and impartial tribunal;
(b)
impose a duty on the state to give effect to the rights in
subsections (1) and (2); and
(c)
promote an efficient administration.”
PAJA
was enacted to give effect to the rights stipulated in section 33 of
the Constitution.
[8]
The review is aimed at maintaining legality and not correcting a
decision on merits.
In review matters of this nature the only way one
can scrutinise the lawfulness or otherwise of a decision to award or
not to award
a tender is to scrutinise the record of all the stages
to see the steps that were taken to arrive at such decision. For the
review
is concerned with manner in which the decision is taken and
not whether or not the decision was right or wrong.
[3]
The record which is called for in terms of rule 53(1)(b) enables the
applicant and the court to determine what informed the impugned
decision under review. It should mirror the manner in which such
decision was arrived at and the reasons therefor.
'The
important thing is that Judges should not use the opportunity of
scrutiny to prefer their own views as to the correctness of
the
decision, and thus obliterate the distinction between review and
appeal
'
[4]
). Rule 53 was therefore
designed to cater for this situation. The Constitutional court has
recently set out the purpose of rule
53 in
Helen
Suzman Foundation v Judicial Service Commission
2018 (4) SA 1
(CC)
as
follows:
“
[13] The
purpose of rule 53 is to 'facilitate and regulate applications for
review'. The requirement in rule 53(1)(b) that the decision-maker
file the record of decision is primarily intended to operate in
favour of an applicant in review proceedings. It helps ensure that
review proceedings are not launched in the dark. The record enables
the applicant and the court fully and properly to assess the
lawfulness of the decision-making process. It allows an applicant to
interrogate the decision and, if necessary, to amend its notice
of
motion and supplement its grounds for review.
[14] Our courts have
recognised that rule 53 plays a vital role in enabling a court to
perform its constitutionally entrenched review
function:
'Without the record a
court cannot perform its constitutionally entrenched review function,
with the result that a litigant's right
in terms of s 34 of the
Constitution to have a justiciable dispute decided in a fair public
hearing before a cou
rt
with all the issues being ventilated,
would be infringed.'
[15] The filing of the
full record furthers an applicant's right of access to court by
ensuring both that the court has the relevant
information before it
and that there is equality of arms between the person challenging a
decision and the decision-maker. Equality
of arms requires that
parties to the review proceedings must each have a reasonable
opportunity of presenting their case under
conditions that do not
place them at a substantial disadvantage vis-à-vis their
opponents. This
requires that —
'all the parties have
identical copies of the relevant documents on which to draft their
affidavits and that they and the court
have identical papers before
them when the matter comes to court'.
[5]
(
footnotes
omitted)
[9]
In this case it is not immediately apparent from the record, which
consisted more
than 900 pages, as to how the decision was taken and
precisely at what stage and on what basis. The decision making organs
are
the Specification Committee, the BEC and the BAC. No one from
these bodies deposed to an affidavit and explained to court what
informed the impugned decision. The minutes of each of these bodies
have not been filed except those of the BEC dated 20 April 2017.
The
BEC filed a report and there is a paragraph from which one can glean
that the BAC approved the recommendations. What we have
is a finding
that the applicant was non-responsive for failure to tender for the
requested size of the space for the lease.
[10]
It is not clear from the record as to why, in the face of the
requirements of the lease and the
fact that the space is not defined
in exact terms, there was a finding that the applicant was
non-responsive. This aspect should
have been dealt with in the
reasons. Full reasons may have explained the precise basis of the
findings even on affidavit.
[11]
The Municipal Manager confessed that he was not part of the decision
making body as a result
he could not comment on most of the
allegations made on behalf of the applicant. Mr Roderick Owen who
purported to confirm his
affidavit does not appear in the record as
the person who was either part of the BEC that made recommendations
or the BAC that
took the final decision. His version is that he was
“involved” in all the stages. He does not inform the
court in what
capacity was he involved. Nowhere does his name appear
in these decision making bodies. In light of this one wonders whether
the
first respondent acted transparently as it is required to do so
by the Constitution. Conduct of this calibre may lower a sense of
confidence in the administration by public bodies. In certain
circumstances it may warrant a cost order being made against the
functionaries responsible irrespective of the outcome of the case.
Grounds
of review:
[12]
The grounds for review can be summarised as follows:
The
applicant contends that the first respondent failed to consider
relevant factors. In this regard Mr Pretorius, who appeared
for the
applicant, submitted that the applicant complied with the tender
conditions. He submitted that the bid document has to
be read as a
whole and interpreted in the context of the requirements of the bid.
He submitted that if one has regard to the specification,
the bid
requirements have been met by the applicant. He submitted that if the
applicant was disqualified for being non-responsive,
by the same
token the second respondent should have been disqualified in that
notwithstanding its offer for 850m
2
there is no key to the
layout plan and that the area specified on the plans of the lettable
area comes to 781m
2
which is less than 850m
2
.
He submitted further that the applicant should have been awarded the
tender because it tendered the lowest price and therefore
scored the
highest points.
[13]
Mr Patterson SC, who together with Ms Ntsepe, appeared for the first
respondent, submitted that
the bid specification required that the
lettable area must be 850m
2
and the applicant failed to meet such a requirement. He submitted
that the first respondent was therefore entitled to disqualify
the
applicant and award the tender to the second respondent. He argued
that the discrepancy of the layout in the plan of the second
respondent regarding the lettable space was explained at the site of
the second respondent. The difficulty I have with this argument
is
that in terms of the General Conditions of Tender
[6]
BCMM
(Buffalo City Metropolitan Municipality) must request a clarification
in writing. The reason for this is obvious. Every step
of the
procurement process must be fair, transparent and all bidders must be
treated equally. No such request in writing was made
and no such
explanation was made in writing.
[14]
It is true that the administration cannot be expected to share with
individuals every phase of
its final decision-making
process.
[7]
However, in light of
the provisions of the General Conditions of Tender as contained in
the first respondent’s bid and section
217 of the Constitution,
it is not unreasonable to expect the first respondent to be
transparent and treat the applicant the same
way it did with second
respondent. It does not help the second respondent to offer a space
of 850m
2
and yet its plan reflects less space.
[15]
Furthermore, if one has regard to the Bid Specification, which was
approved on 16 September 2016,
the tender was for “(t)he
Provision of Office Accommodation: Enterprise Project Management
Office (EPMO)”. Again if
one has regard to the bid invitation
which was published on 11 October 2016 the same description appears
in the advertisement.
In both instances no reference is made to the
size of 850m
2
. Although a reference to ‘
approximately
’
850m
2
is made in terms of the bid
documents
this does not tally with the analysis of the requirements of the
lease as described in the bid specification.
[16]
The applicant contends that according to the requirements of the
first respondent the required
area is 510m
2
excluding one
kitchen and two restrooms. The size of the kitchen is not more than
10m
2
and the size of the restroom is not more than 10m
2
.
It contends that the total requirements would therefore be 540m
2
.
These requirements are set out in the Bid Specification where it is
stated: “
Buffalo City Metropolitan Municipality is seeking
first class office accommodation within the Central Business District
of East
London for its Enterprise Project Management Office (EPMO).
The space requirement is approximately 850 square meters, inclusive
of passage ways and common walkways. The table below indicates the
requirements.”
The table then continues to specify
the requirements and sizes thereof.
[17]
Mr Pretorius submitted that the table referred to above as indicating
the requirements shows
that 540m
2
was the space required.
It was on this basis that the applicant offered its bid.
[18]
The applicant’s bid included a letter from its architect which
explained that 850m
2
space was available. Mr Pretorius
submitted that the first respondent failed to consider the
architect’s letter.
Was
the disqualification of the applicant justified?
[19]
In interpreting the first respondent’s bid it is necessary to
take into account the circumstances
attendant upon the coming into
existence of the need. For this reason the whole documentation of the
bid must be considered cumulatively.
The document refers to the
requirements and an estimation of “
approximately 850m
2
”
is made. The requirements are specific and measurements thereof are
analysed in the bid specification. The interpretation of
“
approximately
” must therefore take into account
the specified requirements which, according to the applicant, do not
get to 850m
2
. The briefing session as envisaged in clause
19 of the General Conditions of the Bid would have afforded the first
respondent an
opportunity to explain these contradictions. This was
not done. In my view the tender needed clarification in order to
avoid different
interpretations by the tenderers.
[20]
In
Allpay Consolidated Investment Holdings (Pty) Ltd and others v
CEO, SASSA
2014 (1) SA 604
(CC)
it was said:
“
The
purpose of a tender is not to reward bidders who are clever enough to
decipher unclear directions. It is to elicit the best
solution
through a process that is fair, equitable, transparent,
cost-effective and competitive. Because of the uncertainty
caused by the wording of the request for proposals and bidders notice
that purpose was not achieved in this case.”
In my opinion
this is apposite in the present case.
[21]
In
Premier, Free State and Others v Firechem Free State (Pty)
Ltd
2000 (4) SA 413
(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
tenderers knowing what is the true subject of the
tender. . . . That
would deprive the public of the benefit of an open and competitive
process.”
[8]
[22]
In my view taking into account the document as a whole especially
with regard to the analysis
of the space required relating to the
tender and in the absence of a satisfactory explanation from the
first respondent the tender
was capable of being interpreted in the
manner that the applicant interpreted it. The word “
approximately”
is an adverb which is used to show that something is almost, but not
completely accurate or exact; but it is roughly.
[23]
Roderick Owen who deposed to an affidavit on behalf of the first
respondent stated in his affidavit
that when the second respondent’s
tender was first examined he noted and performed the calculations
referred to by the applicant
relating to 781m
2
. An
inspection was then conducted on 7 December 2016 (obviously to verify
the lettable space). It was at that inspection that an
acceptable
explanation for the lettable area was made by the second respondent.
If this is correct the second respondent was afforded
an opportunity
to explain its lettable space, albeit not in writing. Fairness would
therefore require that the applicant should
have been afforded such
opportunity as well. In
Tetra Mobile Radio (Pty) Ltd v MEC,
Department of Works, and Others
2008 (1) SA 438
(SCA): it was stated:
“
(F)airness
is inherent in the tender procedure. Its very essence is to ensure
that before government, national or provincial, purchases
goods or
services, or enters into contracts for the procurement thereof, a
proper evaluation is done of what is available and at
what price, so
as to ensure cost-effectiveness and competitiveness. Fairness,
transparency and the other facts mentioned in s 217
[of the
Constitution] permeate the procedure for awarding or refusing
tenders.”
[24]
In the circumstances it would seem to me that bidders were not
treated equally and the applicant
was not treated fairly. In my
opinion the applicant should not have been disqualified as being
non-responsive without having been
afforded an opportunity to be
heard. It is trite law that if an administrator contemplates to take
a decision which adversely affects
your rights you must be afforded
an opportunity to be heard before the decision is taken.
In
Masetlha v President of the RSA
[2007] ZACC 20
;
2008 (1) SA 566
(CC)
para. 184 Ngcobo CJ said:
“
Acting fairly
provides the decision-maker with the opportunity to hear the side of
the individual to be affected by the decision.
It enables the
decision-maker to make a decision after considering all relevant
facts and circumstances. This minimises arbitrariness.
There is
indeed an interrelationship between failure to act fairly and
arbitrariness. In this sense, the requirement of the rule
of law that
the exercise of public power should not be arbitrary has both a
procedural and substantive component. Rationality deals
with the
substantive component, the requirement that the decision must be
rationally related to the purpose for which the power
was given and
the existence of lawful reason for the action taken. The procedural
component is concerned with the manner
in which the decision
was taken. It imposes an obligation on the decision-maker to act
fairly. To hold otherwise would result in
executive decisions that
have been arrived at by a procedure which is clearly unfair being
immune from review.”
[25]
In the premises I conclude that the first respondent’s decision
to disqualify the applicant
was irrational. It failed to consider
relevant facts. Furthermore the first respondent did not act in
accordance with the provisions
of s.217 of the Constitution which
require the system of procurement to be fair, equitable, transparent,
competitive and cost-effective.
The application for review in terms
of the PAJA is therefore well founded.
[26]
With regard to costs, the general rule is that costs are to follow
the event. It therefore follows
that the applicant, as the successful
party, would ordinarily be entitled to a costs order in its favour.
This general rule should
only be departed from in exceptional
circumstances. I see no reason to deviate from this rule.
[27]
In the result I make the following order:
1.
The decision of the first respondent to disqualify the applicant as
non-responsive
and to award the tender to the second
respondent is reviewed and set aside.
2.
The first respondent is ordered to pay costs of the application.
__________________________
B
R TOKOTA
JUDGE
OF THE HIGH COURT
Appearances
for the Applicant Mr Pretorius
Instructed
by Sim & Botsi Attorneys Inc.
For
the first respondent M Patterson SC assisted by Ms Ntsepe
Instructed
by Smith Tabata and Inc.
Date
of hearing: 17 April 2019
Date
delivered 2 May 2019.
[1]
Hoexter
[2]
Hoexter The new constitution and administrative law vol.2 at 244
[3]
Pretoria
Portland Cement Co Ltd v Competition Commission
2003 (2) SA 385
(SCA) [35] Review is not directed at correcting a decision on the
merits. It is aimed at the maintenance of legality, at the
B administration of 'the law which has been passed by the
Legislature' as Bell J put it on the same page of Meintjies's
case.
[4]
Hoexter
op cit p.185:
[5]
See also DA v Acting NDPP
2012 (3) SA 486
(SCA) para.37
[6]
Para.14
[7]
Baxter
Administrative Law p.548
[8]
See
also Allpay Cons Inv Holdings (Pty) Ltd v CEO, SASSA
2014 (1)
SA 604
(CC) 39; Steenkamp NO v Provincial Tender Board, Eastern
Cape
2007 (3) SA 121
(CC) para.60.