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[2018] ZAFSHC 18
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Khuduga N.O and Others v The Free State Development Corporation and Others (A214/2017) [2018] ZAFSHC 18 (22 February 2018)
IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Appeal No:
A214/2017
In
the matter between:
RICHARD
KHUDUGA N.O.
First Appellant
MARTHA
PAULINA KHUDUGA N.O.
Second Appellant
LYNNZAY PRECETHY WYMERS N.O.
Third Appellant
and
THE
FREE STATE DEVELOPMENT
First Respondent
CORPORATION
REGISTRAR OF DEEDS, FREE STATE
Second Respondent
PROVINCE
BOTLOKWA
HOLDINGS
Third Respondent
THOKO
ALICE MALEMBE
Fourth Respondent
ALICE
MALEMBE N.O.
Fifth Respondent
LEBOHANG SAMUEL MOLEKO N.O.
Sixth Respondent
HEARD
ON:
05 FEBRUARY 2018
CORAM:
JORDAAN, J
et
LOUBSER
J
et
MOLITSOAN, AJ
JUDGMENT
BY:
LOUBSER, J
DELIVERED
ON:
22 FEBRUARY 2018
[I]
INTRODUCTION:
[1]
This is an appeal against the Judgment of Chesiwe, AJ, dismissing an
application for
the review of a decision by the First Respondent to
sell by tender a certain filling station situated at Botshabelo to
the Third
and/or Fourth and/or the MMAT Trust represented by the
Fifth and Sixth Respondents. In the Notice of Motion ancillary relief
is
also sought to the effect, in a nutshell, that the Second
Respondent be interdicted from registering the property in the name
of
any of the abovementioned entities pending the finalization of the
review application, that the First Respondent be ordered to have
the
property registered in the name of the Appellants in their capacity
as trustees of the Khuduga Family Trust, alternatively
to revisit the
process of deciding upon a suitable purchaser, and that the First
Respondent be ordered to provide the Appellants
with all information
pertaining to the process followed and the decision made in awarding
the sale to the Respondents as mentioned
above.
[2]
In
her Judgment, the Trial Judge dismissed with costs the application
for a review and for the ancillary relief altogether, and
the Khuduga
Family Trust now comes in higher contention against that decision.
The Notice of Appeal contains many grounds for the
appeal alleging,
inter alia,
that the Trial Judge had made certain factual
errors in her Judgment, which she had failed to determine in the
review application
and that she had dismissed the whole application
on the basis that the balance of convenience does not favour the
Appellants.\
[II]
FACTS PRESENTED BY APPELLANTS:
[3]
The First Appellant avers in his Founding Affidavit that he
had already indicated to the First Respondent in 2005 and in 2007
that
he was interested in purchasing the filling station in question,
but that he had heard nothing of any intention to sell the property
ever since. Then, on or about the 22
nd
April 2015, a Mr
Schalk Van der Merwe, the property manager of the First Respondent,
contacted him and requested a meeting with
him. They met at the Wimpy
Restaurant at Preller Square, Bloemfontein, on the following day,
namely 23
rd
April 2015, where the First Appellant was
informed that the First Respondent intended to sell the property and
that a notice to
this effect was already published. After the
meeting, Mr Van der Merwe handed a document to him purporting to be
an invitation
or advertisement for the sale of the property.
[4]
In this document interested persons are informed that the First
Respondent intends
to dispose some of its significant assets or land,
and black persons or black owned entities are invited to submit
proposals for
purchasing some of its land. It was common cause that
the filling station in question formed part of the assets to be sold.
[5]
The advertisement went on to inform that "a
compulsory
briefing session will be on 10 April 2015 at the FOG Head Office
Board Room address 33 Kellner Street Bloemfontein at
12H00 pm. No
attendance will be recorded after 12H15. Please note that the FOG may
invite detailed proposals or presentations to
those who have attended
the briefing session and submitted expressions of proposals.
.
The FOG retains the right to or not to accept proposals including
to approach certain persons, entities or consortia should proposals
received not be satisfactory or conditions not be met by the
successful bidder and such will be done entirely at FDC's discretion.
The discretion to accept proposals will be entirely based on BBBEE
proposition and intended use for the land to be purchased. The
highest amount offered will not necessarily be
a
final
determining factor for the
(acceptance
of
a
proposal."
At the bottom of the advertisement it is indicated that the
closing date for proposals would be 30 April 2015 at 12H00 pm.
[6]
In.a Supplementary Affidavit, the First Appellant mentions that he
later found out
that the advertisement was published in two
newspapers seven (7) days and five (5) days respectively before the
10th April 2015
when the briefing session was held. He alleges that
it is apparent that insufficient time and exposure was offered for
any persons
to make submissions or to attend the compulsory meeting.
[7]
Following the meeting at the Wimpy, the First Applicant went to see
the MEC clothed
with responsibility over the First Respondent on 28
th
April 2015. He showed the MEC the advertisement, and he told him that
he had difficulty to find the documents to submit a proposal.
He
further informed the MEC that he always wanted to purchase the
property but that he never got the opportunity to do so. According
to
the First Appellant, the MEC then assured him that he and the Premier
will not allow that
"they treat me in that fashion."
The
MEC then immediately telephoned someone at the First Respondent and
instructed that the period for the submission of proposals
be
extended to 15
th
May 2015. The First, Appellant was later
furnished with a letter by the First Respondent confirming that
proposals must be submitted
before 12H00 on 15th May 2015. He then
goes on to point out that he indeed then submitted his proposal
timeously.
[8]
More than a year later it came to the knowledge of the First
Appellant that the filling
station was eventually sold to the Third
Respondent and/or the MMAT Trust. The First Appellant then embarked
upon his endeavours
to obtain information pertaining to the sale to
these entities, especially in view of the fact that the offer made by
the MMAT
Trust was apparently for R15 million less than the purchase
price the Khuduga Family Trust was willing to pay, namely R5.5
million.
Not being satisfied with the response of the First
Respondent to the request for the said information, the Applicant
Trust included
the prayer in the Notice of Motion that the First
Respondent be ordered to provide the said information.
[Ill]
FACTS PRESENTED BY
FIRST RESPONDENT:
[9]
The Divisional Executive of the First Respondent indicates in his
Answering Affidavit
on behalf of the First Respondent that he is
aware of the meeting that allegedly took place at the Wimpy. He
further indicates
that the First Appellant came to see him during
April 2016. This date seems to be a typing error, because it is clear
from what
is said further in the affidavit that it was actually in
April 2015 when the First Appellant met with him at the offices of
the
First Respondent. The First Appellant told him that he was aware
that there was a tender issued for the purchase of the property,
but
the problem was that he missed the compulsory briefing session as
required in the advert. He requested for an extension or
for
permission to be allowed to submit his proposal late. According to
the deponent, he then confirmed that there was a compulsory
briefing
session held which was attended by other bidders. and he informed the
First Appellant that it was his choice to submit
his bid late, and
that he should understand that his bid might be considered
non-responsive because of his failure to attend the
compulsory
briefing session. The deponent further confirms that the date was
indeed extended, but he emphasized the fact that the
date was only
extended to enable all bidders who had attended the briefing session
to submit their proposals as they had received
the documents only a
few days before the closing date.
[10]
The deponent further informs that the compulsory briefing session was
attended by no less than fifty
nine (59) aspirant bidders who had
responded to the newspaper advertisements referred to earlier: He
also confirmed that the property
had been sold to a third party
eventually. He also confirms that the First Appellant submitted a
proposal on 10th May 2015 offering
to purchase the filling station
for an amount of R5.5 million. He also states that the information
requested by the First Appellant
have indeed been provided to the
Applicants at the time of deposing to his affidavit.
[11] Lastly,
it is mentioned on behalf of the First Respondent that the proposal
from the First Appellant
suggested to the First Respondent to dispose
of its asset in a manner circumventing pre-requisite Supply Chain
Management Policy
of the FDC, relevant legislation and other
regulative framework dealing with disposal of FDC property. The
deponent submitted that
the proposal of the First Appellant failed to
comply with the disposal management system set up by the First
Respondent in that
it was not going to be fair, equitable,
transparent and/or cost-effective and competitive. He emphasizes that
the disposal management
system of the FDC involves a process that has
to be fair and ·equitable.
[IV]
FINDINGS OF THE TRIAL JUDGE
:
[12] On
the facts outlined above, the Trial Judge made the following
findings,
inter alia:
(a)
The Applicants have failed to allege anything other than a
prima
facie
right to review and to set aside the decision. The
Applicants have failed to satisfy the applicable test and the
requirements for
an interdict.
(b)
Proper compliance with the procurement process 1s necessary for the
process to be lawful for a
fair outcome in a tender award - the
process itself must be fair. Fundamental to a fair process is the
requirement that all bidders
should be treated equally.
(c) The
tender invitation ... set out the criteria as well as the
requirements for an acceptable tender,
including a compulsory
briefing which would be held, and that non attendance would be
recorded after 12H15.
(d)
It should be strongly frowned upon when a tenderer has a separate
private meeting with officials of the Organ
of State that is
advertising the tender process.
(e) It
would not be equitable for the Court to substitute the Applicants as
the successful bidder and set aside the
decision of the bidding
committee. There
is
no reasonable likelihood that the tender
would be awarded to the Applicant, and the Applicants have therefore
failed to prove any,
or some, of all the requisites for an interim
interdict.
(f) In
the light of these findings, she is not convinced that the balance of
convenience is in favour of the granting
of the Order requested by
the Applicants. She is satisfied that on that basis, she should
exercise her discretion against the Applicants
and dismiss the
application.
[13] Mr
Cronje, appearing for the Appellants before us, contended that the
Trial Judge ought to have found, amongst
other things, that the
compulsory briefing session had no real purpose and that the failure
of the Appellants to attend the session,
could never serve to
disqualify them from the tendering process. Mr Manye for the
Respondents, on the other hand, argued that the
tender process,
in
casu
required strict and equal compliance by all competing
tenderers, and that the non-attendance of the briefing session
rendered the
proposal of the Appellants non-responsive and without
any effect. He pointed out that the Appellants had in any event
submitted
a written tender on 16
th
April 2015, that is way
before the initial closing date for tenders on 30 April 2015. A copy
of this tender document found its
way into the papers, and formed
part of the documents placed before the Trial Judge.
[V]
THE RELEVANT STATUTORY PROVISIONS AND LEGAL PRINCIPLES:
[14]
The Constitution of our country provides that:
"When an Organ
of State in the National, Provincial or local sphere of Government,
or any other institution identified in the
National Legislation,
contracts for goods or services, it must do
so
in accordance
with ·a
system
which
is
fair, equitable,
transparent, competitive and cost-effective."
(Section
217(1) of Act 108 of 1996). Section 3(1) ' of the·
Promotion
of Administrative Justice Act no. 3 of 2000
provides that
administrative action which materially and adversely affects the
rights or legitimate expectations of any person
must be procedurally
fair.
[15]
Our Courts have on a number of occasions pronounced itself on the·
principles arising from the
above and other statutory provisions
where tendering processes were concerned. Amongst the relevant
principles highlighted in those
decisions, are the following:
(a)
Proper compliance with the procurement process is necessary
for the
process to be lawful for a fair outcome in a tender award - the
process itself must be fair. (
Westinghouse Electric Belgium SA v
Eskom Holdings (SOC) Ltd and Another
2016 (3) SA 1
(SCA) at para
38 and 39).
(b)
A tenderer has the legitimate expectation that the contractor
will
award a contract in accordance with its own preferred and published
procedure, chosen presumably in the interests of its own
administrative efficiency. Non- compliance with its own procedure
will be a form of procedural unfairness. (
Total Computer Services
v Potchefstroom Local Municipality
[2007] ZAGPHC 239
;
2008 (4) SA 346
(TPD) at 365
I.)
(c)
A just and equitable approach in the context of the tender
award
involves a process of striking a balance between the interests of the
Appellants on the one hand, and the interests of the
Respondents on
the other hand.
(Millennium Waste Management v Chairperson. Tender
Board
2008 (2) SA 481
(SCA) at 489 G).
[VI]
APPLICATION
OF THE STATUTORY PROVISIONS AND LEGAL PRINCIPLES TO THE EVIDENCE:
[16]
The provisions referred to above are clear in their wording
and cannot leave any doubt as to their ordinary meaning and
substance,
while the principles arising therefrom have already become
trite in our law.
[17]
The history of the matter as outlined by the facts contained in the
application papers, leaves little
doubt that the First Appellant was
desirous to acquire the filling station over a long period of time,
either for himself in his
personal capacity or for the Khuduga Family
Trust. It is also equally clear that his attempts over the years
failed to attract
much enthusiasm from the First Respondent, if any
at all. On a balance of probabilities, this was so due to the fact
that the First
Respondent could not simply dispose of its assets to
anyone without following a specific tender procedure in terms of some
internal
supply chain policy or some legislative frameworks it was
bound to implement.
[18]
The invitation or advertisement published by the First Respondent to
dispose of some of its assets,
including the filling station, gave
the first indication that it was now ready to sell. The invitation to
prospective purchasers
to submit their proposals or tenders, informed
in no uncertain terms that a compulsory briefing session would be
held on 10 April
2015 at the offices of the First Respondent, and
that non-attendance would be recorded after 12H15. It is common cause
that the
First Appellant failed to attend the briefing session.
[19]
Mr Cronje, on behalf of the Appellants, submitted that the
publication of the invitation only a few
days before the briefing
session, was unreasonable and that, as a result, his clients were hot
aware of the session on 10 April
2015. This argument, however, does
not carry much weight in view of the common cause fact that no less
than fifty nine (59) interested
persons did attend the briefing
session. The further argument of Mr Cronje to the effect that the
purpose and the content of the
briefing session is unknown and
therefore somewhat dubious, and that it was nowhere indicated that
non-attendance would result
in disqualification, also holds no water
for the following reasons:
[20]
Whatever the purpose and the content of the briefing session might
have been, the fact remains that
the terms of the invitation document
relating to it were couched in peremptory language by the use of the
word “
compulsory”.
In terms of
Section 1(i)
of the
Preferential Procurement Policy Framework Act no. 5 of 2000
,
an “
acceptable tender”
means any tender which, in
all respects, complies with the specifications and conditions of
tender as set out in the tender document.
No further information
appears from the papers pertaining to the terms and the nature of the
briefing session, and therefore we
are not in a position to decide,
for instance, whether the session represented an
unreasonable requirement in the invitation
document, or not.
[21]
What we do know, is that the decision of this Court must be just and
equitable
(Section 8
of the
Promotion of Administrative Justice Act
no. 3 of 2000
) in the sense that a balance between the interests
of the Appellants, on the one hand, and the interests of the
Respondents,
on the other hand, has to be maintained.
[22]
It is apparent that the First Appellant became aware of the closing
date for proposals during April
2015 because he did submit a
h
proposal on 16
th
April 2015. On the
probabilities of the case, an official of the First Respondent met
with the First Appellant at the Wimpy on 23rd
April 2015 to inform
him that his proposal was invalid in that there had already been a
compulsory briefing on 1oth April 2015,
which he had missed. This
probability is given some weight by the Divisional Executive of the
First Respondent in his Answering
Affidavit, where he states that he
met with the First Appellant thereafter at the offices of the First
Respondent, and that the
First Appellant told him that he was aware
that there was a tender issued out for the purchase of property,
"but
the problem
was
that he
missed
the compulsory briefing
session as
required in the advert."
[23]
By the admission of the First Appellant himself, he then went to see
the MEG concerned to complain
about the situation, and the MEG then
caused the closing date of 30 April 2015 to be extended to 15
th
May 2015. It is common cause that, following this extension, the
First Appellant submitted another proposal on 10
th
May
2015. When the First Appellant eventually realized that his failure
to attend the briefing session was still haunting him,
he decided to
change his tactics by requesting information as to how it came about
that the filling station was awarded to the
relevant Respondents. As
he was not satisfied with that outcome, he continued his quest to
leave no stone untouched to acquire
the filling station, and he then
approached the Trial Court for the relief sought.
[24]
For a tendering process to be fair, it speaks for itself that all
bidders should be treated equally.
The result hereof is that other
bidders, including the successful bidders, who had complied with the
laid down procedure of attending
the briefing session, would not
receive equal and fair treatment if the bid of the Appellants were
now to be considered while the
Appellants had not attended the
briefing session as required.
[25]
I therefore find, in the absence of anything pointing to the
contrary, that the compulsory briefing
session was a valid
requirement in the tendering process, and that non-attendance
rendered the proposa1s made by the Appellants
non-responsive. The
effect hereof is that the ultimate relief sought by the Appellants,
namely the setting aside of the tender
award on review, cannot
succeed. A setting aside would open the back door to the Appellants
in their bid to acquire the filling
station, and this in turn would
result in the relevant Respondents not receiving equal and fair
treatment.
[26]
It
follows that the remaining relief sought, namely an interim interdict
pending the outcome of the review application1 and an order
compelling the First Respondent to furnish information relating to
the award of the tender, becomes mostly irrelevant.
[27]
I
am therefore in agreement with the Court a
quo
that the
application cannot succeed. Although I come to this conclusion for
slightly different reasons than those pronounced by
the Trial. Judge,
the result is that the appeal is dismissed with costs.
P.J
LOUBSER, J
I
concur:
A. F JORDAAN, J
I
concur:
P. E MOLITSOANE, AJ