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[2018] ZAGPPHC 772
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Powertech Transformers (Pty) Ltd v City of Tshwane Metropolitan Municipality and Others (44499/2017) [2018] ZAGPPHC 772 (20 March 2018)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
REPUBLIC OF SOUTH AFRICA
(1)
NOT
REPORTABLE
(2)
NOT OF
INTEREST TO OTHER JUDGES
(3)
REVISED
Case Number: 44499/2017
20/3/2018
In
the matter between:
POWERTECH
TRANSFORMERS (PTY)
LTD
Applicant
and
CITY
OF TSHWANE METROPOLITAN MUNICIPALITY
First
Respondent
SOPITYO
ENGINEERING AND CIVIL CC
Second
Respondent
DEPARTMENT
OF TRADE AND
INDUSTRY
Third
Respondent
NATIONAL
TREASURY
Fourth
Respondent
STHABISO
BUSINESS ENTERPRISE CC
Fifth
Respondent
WEG
TRANSFORMERS AFRICA (PTY)
LTD
Sixth
Respondent
REFQUIP
(PTY) LTD
Seventh
Respondent
DEEP
BLUE SEA INVESTMENTS CC
Eighth
Respondent
SETHEO
ENGINEERING
Ninth
Respondent
STS
ENERGY (PTY) LTD
Tenth
Respondent
UNIQ
HOLDINGS (PTY) LTD
Eleventh
Respondent
SUPERFECTA
TRADING 209 CC
Twelfth
Respondent
CONTINENTAL
AFRICA POWER SUPPLIES (PTY)
LTD
Thirteenth
Respondent
KATSHESHA
ENGINEERING
SERVICES
Fourteenth
Respondent
KGOSHI
ELECTRICAL
CC
Fifteenth
Respondent
RESQUIP
(PTY) LTD
Sixteenth
Respondent
ENZANI
TECHNOLOGIES (PTY) LTD
Seventeenth
Respondent
MDINA
ENGINEERING CC
Eighteenth
Respondent
OURKINGDOM
ENGINEERING AND PROJECTS CC
Nineteenth
Respondent
CYTOTOUCH(PTY)LTD
Twentieth
Respondent
LEBOGANG
ELECTRICAL WHOLESALERS CC
Twenty-first
Respondent
ACTOM
INVESTMENT HOLDINGS (PTY) LTD
Twenty-second
Respondent
AFRICAN
POWER TRADERS (PTY) LTD
Twenty-third
Respondent
LJ
TRADING & MAKROTI ENTERPRISES JV
Twenty-fourth
Respondent
JUDGMENT
DIPPENAAR
AJ
Introduction
[1]
During
the hearing on the 23
rd
of February 2018, the second respondent, after abandoning an
application for postponement, sought leave to deliver a supplementary
affidavit dealing with the discretionary relief sought by the
applicant. Pursuant to argument, an order was granted dealing with
the main relief sought. The order further set time limits for the
filing of such supplementary affidavit and supplementary heads
of
argument.
[2]
In
terms of the order, two issues were reserved for determination:
[2.1]
the discretionary relief under Regulation 14 of the Preferential
Procurement Policy Framework Act
Regulations, 2017 ('PPPFA
Regulations'); and
[2.2]
costs.
[3]
This is the judgment on the reserved
issues.
Discretionary
relief under the PPPFA Regulations
[4]
The
applicant seeks an order that the first respondent be directed to
take steps against the second respondent in terms of Regulation
14.
It does not seek any relief against the second respondent on this
issue. The discretionary relief has no effect on the second
respondent and does not presuppose any findings against the second
respondent and its conduct.
[5]
The
relevant portions of Regulation 14 provide as follows:
"14.(1)
Upon detecting that
a
tenderer
submitted false information regarding its BBBEE status level of
contributor, local production and content, or any other
matter
required in terms of these Regulations which will affect or has
affected the evaluation of a tender, or where a tenderer
has failed
to declare any subcontracting arrangements, the organ of state must-
(a)
inform
the tenderer accordingly;
(b)
give
the tenderer an opportunity to make representations within 14 days as
to why-
(i)
…
.
(ii)
…
.
(iii)
the tenderer should not be
restricted by the National Treasury from conducting any business for
a
period
not exceeding 10 years with any organ of state; and
(c)
if
it concludes, after considering the representations referred to in
subregulation (1)(b), that-
(i)
such false information was
submitted by the tenderer-
(aa)
disqualify the tenderer or terminate the contract in whole or in
part; and
(bb)
if applicable, claim damages from the tenderer; or
(ii)
the successful tenderer
subcontracted a portion of the tender to another person without
disclosing, penalise the tenderer up to
10 percent of the value of
the contract.
(2)(a)
An organ of state must-
(i)
inform
the National Treasury, in writing, of any actions taken in terms of
subregulation (1);
(ii)
provide
written submissions as to whether the tenderer should be restricted
from conducting business with any organ of state; and
(iii)
submit
written representations from the tenderer as to why that tenderer
should not be restricted from conducting business with
any organ of
state."
[6]
The
provisions of Regulation 14 thus envisage an investigative process
which should result in a conclusion. During this process,
the second
respondent is afforded an opportunity of making representations and
stating its case. There is no prejudice to the second
respondent; as
was contended in argument; and it does not automatically result in
any blacklisting.
[7]
The
applicant's papers contain substantial and detailed allegations
regarding fraudulent conduct on the part of the second respondent.
The applicant further alleges collusion between the first respondent
and second respondent in relation to the tender awarded to
the second
respondent. Neither respondent has answered such allegations.
[8]
I am of the view that in the circumstances of this matter, the first
respondent has
the clear obligation to investigate the allegations of
impropriety in the municipal tendering process, as held by the
Constitutional
Court in
Viking
Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v Hidro-Tech Systems
(Pty) Ltd and Another.
[1]
In
the present context, Regulation 14 of the PPPFA Regulations
prescribes the steps to be taken by the first respondent.
[9]
The second respondent's supplementary affidavit ('the supplementary
affidavit') was
delivered late and absent any condonation
application; despite the advices of its legal representatives that a
condonation application
would be delivered. I have, nonetheless,
taken the contents of the affidavit into account as it has a bearing
on both the issues
which must now be determined.
[10]
During argument and in seeking leave to deliver the supplementary
affidavit, the second respondent’s
main complaint was that if
the relief is granted, its affairs would be open to scrutiny and it
may be blacklisted.
[11]
It
was further submitted that the first respondent threw the second
respondent under the proverbial bus by not persisting with its
opposition to the application. It was argued that extensive
discussions took place between representatives of the first and
second
respondents respectively regarding the application and that
second respondent was under the impression that the first respondent
would persist in its opposition to the application.
[12]
These
submissions are disturbing and render further credence to the
applicant's contentions of apparent collusion between the first
and
second respondents pertaining to the award of the tender.
[13]
In
its supplementary affidavit, the second respondent attempted to meet
applicant's allegation that its bid was seen and copied
by the second
respondent by denying such conduct and any knowledge of what happened
to its bid after submission.
[14]
It
was further contended that the applicant must prove how the second
respondent obtained its tender and should have obtained security
camera footage from the first respondent. These contentions are
untenable.
[15]
The
second respondent did not address the important contentions that its
tender falsely misrepresented its position in relation
to the local
minimum threshold content in its documents submitted to the first
respondent and that it could not meet such content
threshold
requirements.
[16]
The
second respondent's allegations are woefully inadequate to meet the
case put up by the applicant and constitute little more
than a
general bald denial of wrongdoing, which does not create any
bona
fide
dispute
of fact. The version put up by the applicant must thus be
accepted.
[2]
[17]
The
second respondent further contends that the first respondent must
detect the wrongdoing before Regulation 14 is applicable and
that the
relief sought violates the principle of separation of powers and a
court lacks jurisdiction to make the order sought.
[18]
This
view is misconceived. Both section 172(1)(b) of the Constitution
[3]
and section 8 of the Promotion of Administrative Justice Act
[4]
confer a generous jurisdiction
[5]
on courts in proceedings for judicial review to make orders that are
just and equitable.
[6]
[19]
Regulation
14 is triggered upon the detection that a tenderer submitted false
information. Once the regulation is triggered, the
process is
mandatory and not discretionary.
[20]
In
the present circumstances, there is no precursor required on the part
of the first respondent in detecting that false information
has been
submitted.
[21]
The
first respondent has not challenged the veracity of the applicant's
averments and has ultimately chosen to abide the decision
of court
and withdraw its opposition to the application after delivery of the
applicant's replying papers. It is thus fully aware
of the facts
evidencing the submission of false evidence to it by the second
respondent and does not oppose the granting of the
discretionary
relief sought.
[22]
On
the papers, it is undisputed that the second respondent
misrepresented the position in relation to the minimum local content
threshold in its tender documents. The facts put up by the applicant
which illustrate the falseness of the second respondent's
representation to the first respondent, is corroborated by no less
than eight affidavits. These facts are not disputed or dealt
with in
either the second respondent's answering or supplementary affidavits.
[23]
In
my view, there is no legitimate basis of opposition to the relief
sought against the first respondent disclosed in the second
respondent's affidavits.
[24]
The
allegations pertaining to the misrepresentations made in the tender
documents submitted to the first respondent were raised
in the
applicant's papers. Since at least June 2017, the first respondent
was aware of the facts which triggered its statutory
obligations
under Regulation 14. The first respondent has failed to comply with
its statutory obligations and has not delivered
any affidavit
evidencing compliance with those obligations.
[25]
In
my view, in the present circumstances, where the first respondent has
remained supine and has taken no steps to comply with its
statutory
duties, it is in the interests of justice
[7]
to grant relief against the first respondent to oblige it to comply
with its obligations under Regulation 14 of the PPPFA Regulations
and
to compel it to comply with its statutory obligations thereunder.
[26]
The
total failure on the part of both the first and second respondents to
address the allegations of fraud in relation to the tender
is
disturbing and warrants investigation in the public interest.
[8]
[27]
The
second respondent will have an adequate opportunity to deal with the
fraud allegations levied against it during the process
envisaged by
Regulation 14. The circumstances surrounding the award of the tender
to the second respondent must be reported and
investigated in
compliance with the prescripts of Regulation 14.
[28]
I
have already found that the award of the tender to the second
respondent is to be set aside and appropriate relief was granted
on
the 23
rd
of February 2018.
Costs
[29]
The
first respondent, throughout, opposed the application without
delivery of an answering affidavit and in which serious allegations
of a fraudulent tender are made, supported by plausible evidence.
[30]
Procedurally,
the first respondent failed to comply with the directives of the
Deputy Judge President in relation to the delivery
of its answering
papers and heads of argument. It did not immediately thereafter
advise the applicant that it no longer intended
opposing the
application. Instead, a notice of withdrawal and intention to abide
was only delivered during the afternoon on the
22
nd
of February 2018.
[31]
Throughout
the litigation, the first respondent exhibited an obstructive
attitude resulting in various interlocutory applications
to obtain
documents and interdict the implementation of the tender, up to the
eleventh-hour withdrawal of opposition.
[32]
In
my view, such obstructive conduct warrants the granting of a punitive
costs order against the first respondent in the circumstances.
[9]
[33]
Despite
withdrawing its opposition at the last moment, it would in my view be
a proper exercise of my discretion on costs to hold
the first
respondent liable for costs up to the hearing.
[34]
The
unanswered allegations of fraudulent conduct on the part of the
second respondent in relation to the tender has a direct bearing
on
costs. The fraudulent conduct is causally related to the
application
[10]
and forms the
very basis of the application. The approach adopted by the second
respondent throughout these proceedings has been
aimed at avoiding
pertinently dealing with such allegations and to avoid scrutiny of
its conduct.
[35]
The
second respondent moreover failed to comply with the Deputy Judge
President's directives and did not file any heads of argument.
At the
hearing it sought an oral postponement from the bar in order to
deliver a further affidavit. The application for postponement
was
later abandoned and replaced with a request to deliver another
affidavit.
[36]
At
the hearing on 23 February 2018, the second respondent opposed the
granting of the relief sought in prayer 5, which is aimed
at
disclosure of the implementation of the tender and the financial
benefits received by the second respondent, notwithstanding
that no
factual or legal basis exists for such opposition.
[37]
Yet
further costs were incurred and the finalisation of the proceedings
delayed by the delivery of a supplementary affidavit and
submissions,
which ultimately did not present any valid basis for opposition
[11]
to the relief sought, but sought to prevent scrutiny of the second
respondent's conduct.
[12]
[38]
In
the circumstances, I am satisfied that a punitive costs order is
warranted against the second respondent.
Order
[39]
Accordingly,
I grant the following order:
1.
The
First Respondent is directed to comply forthwith and within a period
of 30 days from date of service of this order with the
provisions of
Regulation 14, and specifically Regulation 14(1)(a) 14(1)(b)(iii),
14(1)(c) and 14(2)(a) of the Preferential Procurement
Policy
Framework Act Regulations 2017.
2.
The
First and Second Respondents are ordered to pay the costs of the
application up to and including the 23
rd
of February 2018 jointly and severally, on the scale as between
attorney and client, including the costs consequent upon the
employment
of two counsel, where employed.
3.
The
Second Respondent is ordered to pay the costs of the application
incurred subsequent to the hearing on 23 February 2018, on
the scale
as between attorney and client, including the costs consequent upon
the employment of two counsel, where employed.
4.
A
copy of this order is to be served on the first respondent.
E.F.
DIPPENAAR
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
HEARD:
23 February 2018
JUDGMENT
DELIVERED
ON
RESERVED PORTION:
20
March 2018
APPEARANCES:
Counsel for the
Applicant:
Advocate
Steven Budlender and
Advocate Katherine Harding
Instructed
by:
Adams
and Adams
(012 432 6000)
Ref:
ANM/YN/LT3631
Counsel
for the First Respondent:
No
appearance
(Intention to oppose withdrawn by notice 22
February 2018)
Instructed
by:
Gildenhuys
Malatji
(012
428 8683)
Ref:
H Chaane/R Seepane/ama/01815350
Counsel
for the Second Respondent
Advocate G. M. Dube
Instructed
by:
Mkhabela Huntley Attorneys
(011783
9020)
Ref:
Mr Jabu Mkhavele
[1]
2011 (1) SA 327
CC at para [22].
[2]
Wightman t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
SCA, pp 12-13.
[3]
18 of 1996
[4]
3 of 2000.
[5]
Electoral Commission v Mhlope and Others
2016 (5) SA 1
(CC)
paras [83] and [132].
[6]
Steenkamp NO v Provincial Tender Board,
Eastern Cape
2007 (3) SA 121 (CC) paras
[29)-[30].
[7]
Electoral
Commission v Mhlope and Others supra,
paras [83] and [132].
[8]
Nyathi v MEC for Department of Health, Gauteng and Another
2008
(6) SA 94
(CC) para [85].
[9]
MEC for Roads and Public Works, Eastern Cape and Another v
lntertrade Two (pty) Ltd
2006 (50 SA 1 (SCA) para
(21);
Kalil NO and Others v Manaung Metropolitan Municipality and
Others
2014 (5) SA 123
(SCA), para [30].
[10]
Mkhwanazi v Quarterback Investment (Pty) Ltd and Another
2013
(2) SA 549
(GSJ) at paragraphs 82] and [84].
[11]
Fidelity Security Services (Pty) Ltd v Mogale
City Local Municipality and Others
2017 (4) SA
207 (GJ) para [34].
[12]
Graham and Another v Law Society, Northern Provinces and
Others
2016 (1) SA 279
(GP), para [47].